2nd UPDATE: Robert Walters 2Q Grows On Permanent Hires, Asia

7th Jul 2010 10:19

(Adds executive comments on Europe, further analyst comments.) By Rachael Gormley Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Recruitment company Robert Walters PLC (RWA.LN) Wednesday said second-quarter group net fee income rose 59% on the year as recruitment activity accelerated markedly across its global markets, especially in its Asia-Pacific unit, sparking a raft of analyst upgrades. "We've seen permanent and contract recruitment grow but it's predominantly permanent," Chief Operating Officer Giles Daubeney told Dow Jones Newswires. "It's been across all of our specialist areas, but financial services hiring has been quite considerable." For the three months to June 30, Robert Walters said group net fee income, or gross profit, rose to GBP39.7 million from GBP24.9 million a year earlier. In its Asia-Pacific region--the company's largest market by gross profit--net fee income rose 99% to GBP19.5 million. Daubeney said the firm plans to open another office in mainland China and its first in South Korea by the end of 2010. He added that the firm is also considering entering Vietnam and Indonesia, but expansion into these emerging markets is still at the research stage. Net fee income from its burgeoning U.S., South Africa and South American operations doubled on the year to GBP800,000 and an expansion of Robert Walters' South American footprint is also on the cards, Daubeney said. In the U.K., net fee income was up 36% to GBP11.6 million, attributed to increased activity in the financial services sector. Unlike some recruiters, Robert Walters doesn't expect to be hit by the public-sectors cuts recently announced by the U.K.'s coalition government in a move to slash the country's huge deficit, as public-sector work makes up no more than 1% of its global business. However, Daubeney said the firm won't be immune to a double-dip recession in the U.K. and "a lot of questions and uncertainty" remain around the wider markets in the U.K. and Europe. In Europe, net fee income rose 25% to GBP7.8 million, and Daubeney said its French and Belgian offices had held up well, while times remain tough in the Netherlands and Spain. In Ireland, however, where the firm scaled back operations 18 months ago, the unit is now profitable. Following the update analysts at Panmure Gordon moved to a "buy" rating from "hold," as did Merchant John East Securities, joining KBC Peel Hunt and Investec as buyers of the stock. Oriel Securities, which has an "add" rating, said it expects to move its pretax profit estimates for this year to about GBP10 million from GBP7 million and to nearer GBP15 million from GBP11 million for next year. The recruiter, which increased its staff levels 21% in the first half to 1,539, said it has also been investing in its information technology and marketing infrastructure. Panmure's Paul Jones added in a note that there will be a cost/income mismatch in the short term because of the rapid increase in headcount and because most new recruits will be relatively unproductive for at least the rest of 2010. Daubeney said the company will concentrate on increasing productivity of its new and existing staff in the rest of 2010, but didn't rule out further increases to headcount if the markets continue to increase hiring. At 0911 GMT, shares were up 24.75 pence, or 13%, at 220 pence, while the wider FTSE All-Share index was down 1.2%. -By Rachael Gormley, Dow Jones Newswires; 44-20-7842-9308; [email protected] (END) Dow Jones Newswires July 07, 2010 05:19 ET (09:19 GMT)