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FT Opening Quote: Profits up at Robert Walters

Summary:
Profits up at Robert Walters, Biffa updates on acquisitions, government reveals latest Lloyds holdings. FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here. For recruiters, it has been a tale of two cities for sometime: London, and in stark contrast, pretty much any other other city in Europe or Asia.Last week, PageGroup continued with the “it was the best of times, it was the worst of times” theme: reporting strong European growth and foreign exchange gains, undercut by a 17 per cent fall in UK operating profit because of a post Brexit vote decline in accounting, financial services, sales and marketing jobs.This morning, rival Robert Walters also showed why international diversification is now so important

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Profits up at Robert Walters, Biffa updates on acquisitions, government reveals latest Lloyds holdings. FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.

For recruiters, it has been a tale of two cities for sometime: London, and in stark contrast, pretty much any other other city in Europe or Asia.

Last week, PageGroup continued with the “it was the best of times, it was the worst of times” theme: reporting strong European growth and foreign exchange gains, undercut by a 17 per cent fall in UK operating profit because of a post Brexit vote decline in accounting, financial services, sales and marketing jobs.

This morning, rival Robert Walters also showed why international diversification is now so important in recruitment. It reported a 16 per cent constant currency rise in profits before taxation to £28.1m, boosted by its international diversification.

Asia Pacific comprises 42 per cent of net fee income, with profit before tax up from £12.9m to £16.7m – although constant currency operating profit was flat. While market conditions in China “remained challenging”, other Far East territories did well.

Walters also reported good growth in Europe and other international territories, despite tough financial services markets in the USA.

But uncertainty immediately before and after the Brexit vote led to a slow down in recruitment activity in Britain, as employers and employees held off making staffing decisions.

Still, Walters still grew operating profit grow 4 per cent year on year to £6.4m. Despite a soft performance in London, Robert Walters said the rest of the UK had been more resilient: “There were areas of notable activity with commerce finance across the UK performing well and our regional recruitment businesses in Manchester, Milton Keynes and St. Albans benefiting from their focus on SMEs to deliver record performances.”

Biffa, the waste management company, had to make a few changes to its initial public offering prospectus last year to prevent it ending up in the blue recycling bin. Or should it be the green one? No, hang on, that’s translucent plastics, vegetarian soup tins and right of centre mid market tabloid newspapers isn’t it? Anyway, despite the tedious growth industry that is the democratisation of domestic rubbish sorting, Biffa’s owners had to cut the IPO price to 180p a share and agree to buy more shares – rather than selling out of their holdings.

But their decision to hold dumps, rather than dump holdings, is yet to pay off. Biffa shares have barely climbed out of the landfill and now trade at 189p.

This morning’s results trading update offers only news of “small infill acquisitions”. It said group underlying earnings and operating profit were anticipated to be in line with expectations for the full year. Its Industrial & Commercial division’s revenue growth was supported by cost discipline and acquisition synergies. And, in the second half of the year, it “completed or reached agreement on a number of small infill acquisitions”. Its Municipal, Resource Recovery & Treatment and Energy divisions have continued to perform as expected. Fascinating!

And, finally, the world’s slowest sale process is nearly completed. According to the UK Treasury, the government’s holding in the Lloyds Banking Group has been cut to under 3 per cent as its drip feed of disposals nears an end.
This means the government has recovered £19.5bn of the £20.3bn it put in. Only a bit more to go…

Beyond the Square Mile

Asian markets were broadly lower on Wednesday with Hong Kong’s benchmark Hang Seng index down 0.1 per cent, while the Shanghai Composite index was down by the same amount. Japan’s Topix index slipped 0.2 per cent while Sydney’s S&P 200 closed up 0.3 per cent.

Oil prices were climbing in Asia after a slide on Tuesday. Brent, the international benchmark, was up 1.4 per cent at $51.62 a barrel — back above its opening level for the week and more than compensating for a 0.8 per cent drop the day prior. West Texas Intermediate, the US marker, was up 1.6 per cent at $48.49, having closed lower by 1.4 per cent on Tuesday.

The rise came after Saudi Arabia’s energy ministry affirmed the country’s commitment to “stabilising the global oil market”. The statement was rushed out on Tuesday night after Opec’s monthly report showed Saudi production increased in February, adding to supply concerns amid a rebound in US shale oil output.

The US dollar index, which tracks the greenback against a basket of peers, was flat at 101.66.

Intraday

In the US, index futures suggest the S&P 500 will add another 5 points to 2,370, when trading gets under way later in New York.

European eyes are on the Netherlands general election today, watching to see whether Dutch voters continue the populist trend that hit the UK and the US last year.

In the US later today, the US Federal Reserve’s interest rate decision. Markets expect a rate rise but want guidance on how many more are coming.

The corporate calendar for Wednesday includes E.On, Hikma Pharmaceuticals, Polymetal International and Robert Walters.

The economic calendar is as follows (all times London):

07.45: France final inflation reading
08.30: Riksbank’s Stefan Ingves to speak in Frankfurt
09.00: Italy retail sales
09.30: UK unemployment
09.30: ECB’s Peter Praet to speak in Frankfurt
10.00: Eurozone unemployment
10.00: Italy final inflation reading
11.:00: Ireland inflation
12.00: UK prime minister’s questions

The Markets at 08:07

Asian markets
Nikkei 225 down -32.12 (-0.16%) at 19,577
Topix down -3.59 (-0.23%) at 1,571
Hang Seng down -24.81 (-0.10%) at 23,803

US markets
S&P 500 down -8.02 (-0.34%) at 2,365
DJIA down -44.11 (-0.21%) at 20,837
Nasdaq down -18.97 (-0.32%) at 5,857

European markets
Eurofirst 300 down -4.57 (-0.31%) at 1,472
FTSE100 down -9.23 (-0.13%) at 7,358
CAC 40 unchanged 0.00 (0.00%) at 4,974
Dax unchanged 0.00 (0.00%) at 11,989

Currencies
€/$ 1.06 (1.06)
$/¥ 114.73 (114.73)
£/$ 1.22 (1.22)
€/£ 0.8699 (0.8722)

Commodities ($)
Brent Crude (ICE) up +0.70 at 51.62
Light Crude (Nymex) up +0.80 at 48.52
100 Oz Gold (Comex) unchanged 0.00 at 1,202
Copper (Comex) unchanged 0.00 at 2.62

10-year government bond yields (%)
US 2.60%
Germany 0.46%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.21bps at 17.9bp
Markit iTraxx Europe +1.5bps at 73.98bp
Markit iTraxx Xover +3.66bps at 290.38bp
Markit CDX IG +0.82bps at 65.68bp

Sources: FT, Bloomberg, Markit

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Siona Jenkins
Former Cairene; FT Middle east news editor. Views my own.