Recruitment firm sees big Brexit boost in Q3

International recruitment group Robert Walters (LSE: RWA) reported strong Q3 results this morning with gross profit increasing in every region and favourable currency exchange rates having a considerable impact.

Gross profit for the entire group increased 23% (8% constant currency), with the lionshare coming from outside of the UK (68%). Organic growth was strongest in the UK, but the weakness of Sterling versus the Euro and Dollar saw it's activities in APAC and Europe surpass that division.

The company has a strong balance sheet with net cash of £18.6m.

The company said Resource Solutions, its recruitment process outsourcing business, performed strongly, whilst Financial services remained "relatively subdued" but did show signs of an increase in activity levels towards the end of the period.

Netherlands, Spain, Germany and Switzerland all saw net fee income growth of 20% in constant currency. The US, Middle East, South Africa and Brazil saw income up 28%* (50% actual).

Broker Panmure Gordon said:

"It’s never a dull moment in the world of recruitment. Robert Walters has delivered a solid Q3 update, with net fee income +23% on a sterling reported basis. On a constant currency basis NFI was +8%, underpinned by Europe +8% and UK +9%.

Whilst net fee income growth trends are lower than those delivered FY15, they remain consistent with 1Q16 and 2Q16. Add the FX tailwind into the mix and we are raising our FY16 and FY17 PBT forecasts (1.1% and 4.8% upgrade respectively). As a consequence, we expect the shares to regain further losses and are raising our TP to 420p (P/E 17.0x in-line with 36 month average)."

CEO Robert Walters said:

"The Group has had a good third quarter increasing net fee income by 8% in constant currency. All of the Group's regions grew net fee income which coupled with a strong performance from Resource Solutions, our recruitment process outsourcing business, again demonstrates the strength of our global and diversified business."