Robert Walters reported steady international earnings growth last year, outweighing a fall in profits at the recruiter’s UK division as financial hiring dwindled.

Recruitment in the UK was “like running up a down escalator” in the current market, said Robert Walters, chief executive of the eponymous company. Domestic net fee income rose 3 per cent in the year to December, but operating profit in the UK declined from £1.3m to £500,000 because of wage inflation and the costs of a head office move. Mr Walters said he expected UK profits to recover this year, although trading conditions would remain “tough”.

The fall in domestic profits was outweighed by earnings growth elsewhere, driving a 15 per cent rise in pre-tax profit to £15.1m. In line with rivals such as Michael Page and Hays, Robert Walters now does most of its business overseas, with 74 per cent of net fee income generated outside the UK last year. “[The UK] is not an easy place to be at the moment – thank goodness it represents only a quarter of our business,” Mr Walters said.

The group’s revenue grew 24 per cent to £528.1m. Net fee income – a better performance indicator for recruitment companies than raw revenue – rose 18 per cent to £183.4m.

Growth was strongest in Europe, where net fee income increased by 29 per cent. Net fee income in Asia-Pacific, which includes the Australian business, grew 23 per cent, despite a slowing pace of growth toward the end of the year.

Mr Walters said the group would strengthen the Asia-Pacific operation this year by opening an office in San Francisco. He said this should not be seen as “a move into North America”, but would focus on helping Japanese and other Asian countries that were recruiting in the US. The group was also planning new offices in Rio de Janeiro and Munich.

He said the UK operation would not lapse into a loss despite the declining profits. While revenue had been hurt by a weak financial recruitment market– except in areas such as risk and compliance – Mr Walters said that “when [banks] come back they will come back strongly”.

The company bought back £1m of its shares last year, and would carry out more buybacks this year, said Alan Bannatyne, finance director.

The shares climbed 4.3 per cent to 239p, meaning they have now risen 48 per cent since the start of the year.

Caroline de la Soujeole, an analyst at Seymour Pierce, said that the shares – and those of the other white-collar recruitment companies – looked overvalued, despite expectations that such a cyclical sector would benefit strongly from a recovery in sentiment among investors and customers. The shares now trade on 26 times this year’s forecast earnings, and 18 times 2013 earnings.

Earnings per share rose 14 per cent to 12.7p. A final dividend of 3.68p a share gave a total dividend of 5.15p, 5 per cent up on the previous year.

Year to Dec 31% change
Sales£528m+25
Pre-tax profit£15.1m+15
EPS12.7p+14
Dividend5.15p+5

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