Brexit and election uncertainty knock hole in Robert Walters’ UK profit
Robert Walters’ share price dropped today as it revealed a huge 23 per cent dent to UK profits as a result of a rollercoaster year of political uncertainty in 2019.
UK gross profit fell from £26.8m in the fourth quarter of 2018 to £20.7m in the corresponding period last year.
Read more: Time too short for post-Brexit trade deal, warns EU
Overall group profit fell eight per cent year on year to £94.2m as Robert Walters saw declines in every market save Europe, where earnings rose one per cent to £27.7m.
The recruiter cited “significant political and economic uncertainty, particularly in the UK”.
Speaking to City PM, chief executive Robert Walters said: “We are rather like stock markets in that we don’t like uncertainty. The fact there was a [decisive] result in the election is a good thing in itself.
“Brexit continues of course, we haven’t seen the end of that but at least there seems to be a sense of direction.”
The recruitment company stuck to its full-year profit target but that failed to stop investors sending its share price down 10 per cent to 524p in early trading.
Walters warned that “client and candidate confidence deteriorated” in the UK due to the political uncertainty surrounding Brexit and the General Election.
Both the FTSE 100 and sterling rebounded the morning after the December vote as it became clear that Boris Johnson had won with a large majority.
But those trends then reversed as the Prime Minister doubled down on his commitment to quit the EU with or without a trade deal by the end of 2020.
Today EU chief negotiator Michel Barnier echoed EU Commission president Ursula von der Leyen’s warning that striking a trade deal by that deadline will prove impossible.
Walters told City PM that his firm is somewhat shielded from any negative Brexit outcomes by having a presence in cities like Paris and Frankfurt, if UK jobs move abroad.
Besides what happens with Brexit, Walters added that China’s trade war with the US will be a “massive” factor for the recruiter’s 2020 fortunes.
“If we see a glimmer of hope there – which we seem to be seeing – then I think that will have a big impact.”
Read more: Why Robert Walters was open to a no-deal Brexit outcome
US President Donald Trump is set to sign the first phase of a trade deal with China on 15 January that would see China lift its purchasing of US farm goods in exchange for lower tariffs.
Chief financial officer Alan Bannatyne added: “If Trump signs a paper on 15 January … that’s really good news for the jobs market.”