There is probably very little that Robert Walters doesn’t know about executive recruitment in the world of banking, financial and professional services. He has been matching candidates with employers since 1985, when he set up his eponymous recruitment firm in an office above the Café Royal in central London.
Today, Robert Walters Group has survived three recessions and employs more than 2,600 people in 24 countries — and its figures are looking more than a little healthy. In a second-quarter trading statement yesterday, overall net fee income was up 11 per cent at £60 million, with growth recorded in all regions. In the UK, net fee income has jumped by 19 per cent to £20.1 million.
Robert Walters said that despite the many issues still facing the financial services sector, which generates about a fifth of its fee income, growth remained strong.
There are several reasons why Robert Walters is on the up. It is not reliant on any one industry for growth and is operating in many countries where there is a shortage of talented candidates and a need for professional recruitment skills. Rising confidence among businesses is leading to more job creation, while wage inflation is on the rise. This means that Robert Walters gets to place more candidates and take a greater fee (which is based on a percentage of a candidate’s salary).
However, Robert Walters is not cheap. Its shares are trading at a record high and investing means taking a view on how much more growth might come. The key metric to look for is operational gearing. About 70 per cent of its fee income comes from permanent placements and its recruiters are placing only one candidate a month currently. This could rise before too long to about one and a half placements per recruiter. For a group that operates on a team-based profit share, this additional revenue will come straight through to the bottom line.
Yesterday, Panmure Gordon upgraded its full-year expectations for Robert Walters and said that although the shares looked “fully valued”, the net fee income growth and a “well-entrenched earnings momentum” meant the group was still an attractive investment. Buy.
Fee income+15%
UK income +19%
MY ADVICE Buy
WHY It has successfully ridden the recession and is now primed for further growth as businesses start to create new jobs
Weir has been the worst- performing Tempus pick this year and things got no better yesterday when the acquisition of an American specialist valve manufacturer was accompanied by a near-5 per cent slide in the shares.
The skid actually had little to do with the deal and more to do with the latest sharp fall in the price of crude and metals. It was not helped by JP Morgan Cazenove taking a new look at the business and still coming to the conclusion that there is a substantial downside to the prevailing stock price. Its target price of £14.17 compared with last night’s close of £15.82.
Tempus picked Weir at the start of the year at £18.83 in the belief that investors had concentrated on its exposure to the oil and shale gas markets while ignoring its work in helping global miners involved in minerals extraction. Yesterday’s deal, at up to $47 million for a business with underlying earnings of $6.2 million, fits in to the latter category. The Michigan-based Delta Industrial Valves makes so-called knife gate valves that are capable of operating in high–pressure, high-temperature surroundings, transporting slurry from mines. As such, it is the archetypal Weir deal — buying a technology or product that is not already in its portfolio but with the capability of being exported to other areas.
Weir is what it is — hopelessly exposed to the ups and downs of oil prices. It remains, though, a fundamentally well-placed and well-run business that Tempus continues to hold.
Market cap £3.4bn
Deal price $47m
MY ADVICE Hold
WHY A well-run group that will recover with oil prices
Despite its name, Young & Co’s Breweryis not a brewery. When it closed its historic Ram Brewery in Wandsworth, south London, in 2006, it handed production of its beers to Charles Wells, the Bedford brewer, and kept a 40 per cent stake in a newly established joint venture. It has sold that stake since, though, and no longer has anything to do with brewing.
What Young’s does do is run pubs and, as yesterday’s first-quarter trading update shows, it runs them pretty well. Like-for-like sales in its core managed pubs operation rose by 5.6 per cent, ahead of the market, with food up by 7.8 per cent, drink up by 4.2 per cent and its hotel accommodation up 11.9 per cent. Total sales, including the eight pubs it bought last year, grew by 8.3 per cent. Steve Goodyear, the chief executive, says he’s hopeful that Young’s can keep the momentum going, helped by the Rugby World Cup and some decent weather.
It is also reaping the benefits of judicious investment, with three new pubs in Nine Elms, Tooting and Woolwich under development. With consumer confidence growing, its premium pubs should continue to prosper. Buy.
Total sales +7.8%
Like-for-likes +5.6%
MY ADVICE Buy
WHY Economic recovery to boost consumer confidence
And finally . . .
Two years ago, Victoria, the carpet maker, was looking threadbare. Poor trading and boardroom feuding had left the share price languishing at 70p. Last night it closed at £10.75. Geoff Wilding, the abrasive Antipodean, has ruthlessly cut costs, squeezed inefficiencies and restructured the debt. He has also started to build scale through acquisitions with, analysts say, one eye on an eventual trade sale. His reward — 50 per cent of the company — was controversial, but few shareholders are complaining.
