It looks like there’s still room at the top in the C-Suite recruiting sector.
Los Angeles executive recruitment firm Korn/Ferry International last week posted first quarter earnings that serve as a counterpoint to recent dismal job statistics.
And there may be room at the middle, too: Korn/Ferry’s mid-level executive outsourcing division is seen as poised to become a growth engine.
The recruitment firm, which is still focused mostly on executives at the CFO and CEO level, posted an 11 percent hike in fee revenue for the quarter to $206 million. That represents most of the company’s sales, with the rest coming from training and other programs. Total revenue was $218 million.
The first quarter results included an 8 percent rise in North American fees. That gave investors reason to be optimistic in the face of the “credit crunch” that’s been seen as hindering economic expansion and corporate hiring.
“In the face of continued economic uncertainty, we believe our solid first quarter results reflect the long-term needs of our clients to attract and develop talent,” Chief Executive Gary Burnison said in a statement.
The company, however, has recently seen demand weakening, especially in the financial services sector.
First-quarter net income of $15.9 million was down 7 percent from the previous year in large part due to increased costs. But the profit-per-share of 36 cents beat both Wall Street’s predictions of 30 cents per share and the company’s own June forecast of profit between 28 cents and 32 cents.
Korn/Ferry’s European market saw a 15 percent surge in fees for the quarter along with a surge in business in South America, due to expansion at Brazilian-based oil company Petrobras.
Korn/Ferry also posted a 22 percent hike in its mid-level executive human resources outsourcing sector, Futurestep, and could offset declines in the company’s main business as economic problems deepen. The division shows Korn/Ferry has undertaken a necessary diversification process.
“The growth in Futurestep is a sign that the company recognizes the soft market and is working to diversify its business,” said Tobey Sommer, an analyst with SunTrust Robinson Humphrey.
Demographics favor Korn/Ferry’s future, he said, despite a dicey near-term. He maintains a “neutral” rating on the stock.
“With the retirement of baby boomers looming and with more than $300 million in cash on hand, I’m cautiously optimistic that they will weather the storm and come out in a good position when the market eventually turns itself around.”
