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Robert Walters Declines on Challenging Outlook: London Mover

Robert Walters Plc (RWA) fell the most in almost six months after the recruitment company said there were no signs that “challenging” market conditions will improve in 2013. Hays Plc (HAS) and Michael Page International Plc (MPI) also declined.

Robert Walters fell as much as 5.9 percent, the biggest intraday drop since July 13, and was down 5 pence or 2.5 percent at 198 pence at 11:43 a.m. At least four analysts trimmed their 2013 profit estimates.

“Under current trading conditions we still believe most recruiters remain significantly over-valued,” Paul Jones, an analyst at Panmure Gordon & Co. who recommends selling the stock, said in a note to clients. “Robert Walters is no exception.”

The recession in Europe, the slowdown in emerging markets and fewer banking sector hires are holding back job recruitment and providing few signs of when markets will recover. Companies such as Hays now earn most of their fees outside the U.K.

“With market conditions remaining challenging, and the nature of the downturn meaning that visibility is even lower than usual, we are rebasing our forecasts to take a more cautious stance on the pace of recovery,” Sebastien Jantet, an analyst at Investec Plc (INVP) with a buy recommendation on the stock, said in a note to clients.

Continued Uncertainty

Fourth-quarter net fee income rose 2 percent to 47.4 million pounds ($76.3 million) from a year earlier, and was 4 percent higher on a constant currency basis, London-based Robert Walters said in a statement.

The company expects to meet its 2012 forecasts and had already taken action to manage its cost base given the continued uncertainty, Chief Executive Officer Robert Walters said.

Hays, the U.K.’s largest recruitment firm, is due to provide a fourth-quarter trading update on Jan. 10. It fell as much as 4.2 percent and was down 2.5 percent at 83.75 pence. James Gilbert, an analyst at Canaccord Genuity, yesterday raised Hays to buy from hold on evidence of stabilizing global demand.

Michael Page, which is due to make a trading statement a week today, fell as much as 6.6 percent, the most since June, and was down 3.7 percent at 399.4 pence.

Investec’s Jantet cut his estimate for 2013 pretax profit at Robert Walters by 28 percent and by 40 percent for 2014. Analysts at Canaccord, Panmure and Shore Capital also lowered 2013 pretax profit estimates. Oriel Securities said it would “look carefully” at this year’s estimates, which may prove demanding given the current trading and outlook.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net

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