March 3, 2020 / 7:21 AM / 5 months ago

UK recruiter Robert Walters warns coronavirus may hit 2020 profits

(Reuters) - British recruiting firm Robert Walters (RWA.L) warned on Tuesday that the coronavirus outbreak could hurt profits in 2020, while also reporting a fall in pre-tax earnings for 2019.

The small-cap firm’s shares, which eked out a 1% gain last year as recruiters struggled with a hiring slowdown, were down 4.5% on Tuesday by 1045 GMT.

The coronavirus, which has spread quickly to dozens of countries after originating in China late last year, has disrupted global business supply chains and forced many companies to put off recruitment plans.

Robert Walters, which operates in over 30 countries, said the outbreak was making the global recruitment market unpredictable.

“The virus has slowed things down, particularly in certain countries, obviously China being one,” Robert Walters, chief executive of the eponymous company, said in a telephone interview.

“Prior to the coronavirus, we were quite optimistic. Because the coronavirus (situation) is going to change day-to-day, we are just obviously more cautious.”

For 2019, Robert Walters reported a 3.5% year-over-year fall in pre-tax profit to 47.4 million pounds ($60.6 million).

Brexit, the Sino-U.S. trade war and pro-democracy protests in Hong Kong caused much political and economic uncertainty, hitting confidence among businesses and resulting in a recruitment slowdown for much of 2019.

Although Robert Walters’ overall net fee income rose 3% in 2019, it was well below the previous year’s 14% growth as Brexit- and British election-related uncertainty led to a 9% drop in net fee income within Britain.

The company’s British business was doing “reasonably” well since the election in December, Walters said. “I won’t say it is fantastic, because there is still some uncertainty around the negotiations about Brexit,” he added.

Rival recruiters Hays (HAYS.L) and PageGroup (PAGE.L) also had a challenging 2019, with weakness in hiring seen in markets including China, Britain, France and Germany.

The group’s overall headcount fell 3% to 4,027 in 2019, with most cuts focused in its recruitment process outsourcing business.

It also announced a 3% increase to its final dividend to 11 pence per share.

Reporting by Indranil Sarkar and Sachin Ravikumar in Bengaluru; Editing by Bernard Orr, Vinay Dwivedi and Andrew Cawthorne

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