Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong balance sheet with net cash of around GBP 49 million.
- Average fees remained strong across all markets despite lower volumes.
- Continued investment in technology, including the rollout of the custom-built CRM system, Zenith.
- Solid performance in Japan and improved performance in Greater China.
- Declared an interim dividend of 6.5p per share, in line with the prior year.
Negative Points
- Group net fee income in the first half was down 14% year-on-year in constant currency terms.
- Challenging hiring market conditions globally, with lower volumes impacting financial performance.
- Significant decline in recruitment outsourcing net fee income by 23%.
- Headcount reduced by 15% year-on-year, reflecting tight cost management.
- Political uncertainty in key markets like France further dampened client and candidate confidence.
Q & A Highlights
Q: Can you expand on what will be covered at the upcoming Capital Markets event in September?
A: The event will delve into geographic penetration and service line diversification, including interim and workforce consultancy. It will also provide an opportunity for investors and analysts to meet the executive team and regional MDs. (Toby Fowlston, CEO)
Q: What is the long-term outlook for fee rates and productivity in Japan?
A: Japan has high fee rates due to low churn. The key opportunity is to increase perm placements per fee earner, which could significantly boost fee income and profitability. (Toby Fowlston, CEO)
Q: Can you provide more color on the strong performance in Mainland China?
A: Investments in leadership and sectors like healthcare in Shanghai have paid off. The China plus 1 strategy has also benefited international enterprise businesses in Southeast Asia. (Toby Fowlston, CEO)
Q: How should we think about headcount growth and profitability in markets with fewer than 50 fee earners?
A: Headcount growth will be data-led, based on job flow and productivity. Markets with fewer than 50 fee earners can still be profitable, but achieving critical mass helps drive consistent profitability. (David Bower, CFO)
Q: Are there any changes in fee rates in countries with high counter-offer activity?
A: Fee rates have remained stable or marginally increased. There is an opportunity to further increase fee rates in certain markets over time. (Toby Fowlston, CEO)
Q: What is the outlook for headcount investment in the second half of the year?
A: Headcount investment will be selective and data-driven, focusing on markets with strong job flow and productivity. The goal is to maintain a balance between growth and efficiency. (David Bower, CFO)
Q: What is the current state of the RPO business and outsourcing tenders?
A: Volume-driven RPO and MSP contracts are challenging, but the workforce consultancy business is showing significant growth and will be a focus for future investment. (Toby Fowlston, CEO)
Q: What is the expected tax rate for the year?
A: The tax rate is expected to be slightly higher than last year's rate of around 37%, given the trading conditions in the first half. (David Bower, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
