(Reuters) - UK based global recruitment firm Robert Walters Plc (RWA.L) reported a fall in fourth-quarter gross profit on Thursday amid a difficult labour market impacted by caution and uncertainty over Brexit, sending the company’s shares down more than 5%.
Robert Walters, which competes with Hays (HAYS.L), SThree (STEMS.L) and PageGroup (PAGE.L), said gross profit from its home market fell 23%, leading to a 7.9% slide in overall gross profit or net fee income to 94.2 million pounds for the quarter ended Dec. 31.
Elsewhere, the U.S.-China trade war and anti-government protests in Hong Kong have led employers to hold off hiring, while employees remain cautious about changing jobs.
In October, Robert Walters had said it did not expect its annual earnings to grow. PageGroup (PAGE.L) had also warned of lower annual operating profit due to similar issues.
On Thursday, Robert Walters said its annual profit was likely to be in line with market expectations, helped by a rise of 2% in annual net fee income and a strong first half.
Chief Executive Officer Robert Walters said he saw the “seeds of confidence returning” after UK Prime Minister Boris Johnson’s landslide election victory in December, which gave a clearer sense of direction with regards to Brexit. He said expectations of a phase one trade deal between the United States and China would also buoy confidence.
Hong Kong, which has suffered from six months of unrest, and London were among the most difficult markets for the recruiter.
“I think with the mindset of being based in the UK, those global banks headquartered in the UK just slowed down hiring in the fourth quarter,” Chief Financial Officer Alan Bannatyne told Reuters, adding that more normal hiring patterns returned in January.
Walters noted that if financial services jobs were to move from London to Frankfurt or Dublin in Europe due to Brexit and from Hong Kong to Singapore in Asia due to unrest, the company could benefit because it has operations in all those countries.
Robert Walters’ shares however were 5.5% lower at 544 pence at 1130 GMT.
The recruiter has reduced its own headcount by 5% to 4,027 by the end of 2019 to cut its biggest cost component, with the loss of jobs coming mostly from its Resource Solutions business, which handles recruitment outsourcing.
Reporting by Yadarisa Shabong in Bengaluru; Editing by Arun Koyyur and Elaine Hardcastle