Good morning, and welcome to the Robert Walters Q3 trading update call. We are joined this morning by Toby Fowlston, Chief Executive Officer, and Jonathan Solesbury, Interim Chief Financial Officer. If you'd like to ask a question during today's call, please press star one on your telephone keypad. I would now like to hand the call over to Toby. Please go ahead.
Good morning, everyone, and thanks for joining us. I'm Toby Fowlston, Chief Executive at Robert Walters, and I'm joined today by Jonathan Solesbury, our interim CFO. As you'll see from this morning's update, we are encouraged that the group is now back to growth. Before I hand over to Jonathan, I want to spend just a couple of minutes on what we have been doing across the business and what we are now seeing as a result. At our Capital Markets Day in 2024, I talked about bringing greater rigor and focus to our business whilst retaining our entrepreneurial culture. I called it Disciplined Entrepreneurialism. In practice, that means things like, one, managing the details.
We have better data visibility of what is happening market- by- market, office- by- office, and desk- by- desk, and this gives us a clearer view of productivity and pipeline conversion, so we can see where the opportunities are and where and how to improve performance. The second is turning relationships into results. The relationships that we value so highly must be backed by trust and capability. That means knowing our markets, spending more time face to face with our clients and our candidates, understanding what they need, and having the credibility to challenge them when we think there is a better answer. Of course, it all starts with leadership. We have strengthened leadership in a number of key markets and businesses and set clearer expectations around performance. Our leaders today are more commercial.
They know their markets, are closer to their clients, develop their people, and contribute to revenue. The same standards apply at the top of the organization, including me. There is more to do, and market conditions are still uncertain, but we are seeing those actions translate into improved performance. I'll now hand over to Jonathan to take you through performance at the group level before I talk through what we're seeing across our markets and service lines.
Thank you very much, Toby, and good morning, everyone. Let's turn to group trading during the third quarter, where, as you're accustomed to, unless otherwise stated, all percentage movements in net fees are in constant currency terms. Group net fees in Q3 were up 1% year-on-year, a sequential improvement vs the first half of 2026. Over half our specialist recruitment portfolio was in growth in the third quarter, a broader base than seen in H1. Additionally, recruitment outsourcing saw its third consecutive quarter of year-on-year growth. Turning to productivity, headcounts, and costs. It was pleasing to see net fee income per fee earner, our overall measure of productivity, up 8% year-on-year. Perm placements, per perm fee earner per month were 0.89, and our actions remain focused on driving further improvements in volume productivity.
Fee earner headcounts continue to be carefully managed and was broadly stable in the prior quarter. We consider the existing fee earner headcount levels to be about right overall for prevailing market conditions. At the business line level, though, as Toby alluded to earlier, we remain agile in positioning the business as required market- by- market. We saw further progress in respect of operating costs during the quarter, with the underlying cost run rate per month in Q3 at around GBP 22 million. Moving to the balance sheet, period end net cash was around GBP 13 million. During the quarter, consistent with our previously stated objective to further optimize cash levels across the group, an additional GBP 20 million of financing facilities were secured, around half of this in international markets.
Let me pass you back to Toby, who will take you through trading in our service lines as well as the wider market backdrop.
Thanks, Jonathan. I'm now going to take you through our specialist recruitment results across each of our four geographic regions before turning to recruitment outsourcing. Starting with Asia Pacific, where specialist recruitment net fees were flat year-on-year in the third quarter. Japan, our largest specialist recruitment market, saw a third consecutive quarter of growth, with net fees up 5%. This was led by strong performance in temp, while perm also grew year-on-year. New Zealand continued to see growth, with net fees up 13%, driven by strong temp volumes. Meanwhile, the weakness in perm offset the stronger performance in temp in Australia, which overall was down 8%. In Greater China, net fees were down 5%, where growth in Hong Kong and Taiwan was offset by Mainland China. In Europe, net fees were down 5%, albeit both France and the Netherlands saw modest sequential improvement.
In France, net fees were down 8%, with the sequential improvement primarily driven by our interim business. While in the Netherlands, net fees were down 9% with a more resilient performance in perm. Spain continues to be the brightest spot in the region, with net fees up 10%. The hiring markets continue to be more supportive, but we are also spending more time in front of clients, and we can see the impact that is having on performance. In Belgium, which was down 21%, actions continue to improve the performance there. Looking now to the U.K., where net fees were up 14%. I have talked previously about the changes we made to the leadership of that business, the decisions we took around our office footprint, and our focus on the sectors and disciplines where we believe we can win. We are continuing to see those decisions translate into performance.
What is encouraging is that this has been achieved against a market backdrop that remains challenging. We are not seeing a sudden influx of new jobs. The difference is in how we are converting the opportunities that are there. In the rest of the world segment, net fees were down 13%, although that includes the impact of offices which were closed last year. Americas, which comprises our U.S., Mexico, and Chile operations, performed strongly with net fees up 29%. In the Middle East, fees were down 39% as the region continues to be impacted by the ongoing conflict. Looking at outsourcing, net fees were up 19%, and we saw continued very strong growth from our consultancy offering, alongside year-on-year progression from the combined RPO and MSP offerings. Stepping back, I am encouraged by the progress that we have made in the third quarter.
Returning the group net fee growth is an important milestone, but more importantly, we continue to see evidence that the actions that we have taken are working. We are not getting ahead of ourselves. Conditions remain mixed across our markets, meaning we expect volatility and caution to continue as we enter the final quarter. That said, we feel we have developing momentum in the business, particularly with our cost actions, and that grounds our expectation for the 2026 financial result to be at least in line with current market expectations. Jonathan and I will now be very happy to take the questions.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our first question is from Sanjay Vidyarthi from Panmure Liberum. Please go ahead.
Morning, Toby, Jonathan. Just a question on Japan, please. You've talked in the past about how I think you need to kind of broaden the funnel and get more jobs coming through the pipeline there to help with the productivity. Can you talk a bit about how that's progressing and where we are now in terms of Japan's productivity vs the rest of the group? Thanks.
Yeah, sure. So we have been very deliberate, Sanjay, and Japan is known as a key market for us. And this year we have really focused on improving our productivity with the existing headcount. So we haven't actively grown headcount in Japan. I'm delighted to see that our productivity in terms of our net fee income per fee earner and also our trading contribution per fee earner is significantly up. So we're seeing big improvements there. On a PPH perspective, I still think there is room for improvement there, but it isn't a single metric that we look at because on the one hand, we could be placing a very senior executive, on the other hand, a more junior individual as well.
So we tend to look at things like placements per head per month, net fee income per fee earner and TC per fee earner collectively rather than in isolation. But I'm really encouraged by the improvement in productivity we're seeing there and also the fact that we've seen both our perm and our temp business in growth, albeit that has been accelerated more by the temp performance. So overall, I'm really encouraged by what I'm seeing in Japan, and we're going to continue to focus on that operating leverage improvement that we've seen this year.
Okay, that's great. Are there any other markets where there's I know it's a factor across lots of markets, but are there any particular markets where there's a focus on that and you're seeing the results coming through particularly strongly?
Yeah. I think Spain would be another example. I think New Zealand would be another example as well. I think the shape of what we are really trying to focus on next year is to improve wherever we can that operating leverage. What I mean by that is we start seeing our growth in profit outstrip our growth in net fee income, which in turn outstrips our growth in headcount as well. That's the shape that we really want to start moving towards. I think now we have made real significant progress on the cost base, which gives us a great platform going into next year. Obviously, we need to be super disciplined about how we focus our efforts on that going into 2027.
Understood. Thanks very much, Toby.
Thank you. Our next question is from Steve Woolf from Deutsche Bank. Please go ahead.
Morning, guys. A couple from me. Just in terms of whether you would be prepared to split out the salary growth as part of the productivity year-on-years for us. Secondly, on the U.K. again, like you say, it's still very much against the performance of the peers, which is fantastic. You mentioned the self-help initiatives. I was wondering whether you could point to some of the end markets that you have been focusing more on that's probably, possibly led to that degree of outperformance. Then thirdly, a rough idea of some of the fee rates that you might be achieving now, and I pick a couple random where like a Spain or a Japan where things are doing well relative to a France or a Netherlands. Are we at top, middle, bottom? Where's the differential between those rates and countries, please? Thank you.
Sure. Okay. Thanks, Steve. I'll take the second and the third question. I'll answer them now and then I'll get Jonathan to talk to you about the first question. Just on the U.K., I think what's really important to recognize in the U.K., I look very much at what I would call the enterprise markets to the SME markets. If you look at the U.K. in isolation, and I think the patterns are fairly similar actually across the group. We've got roughly 34 million people employed in the U.K. And within that, 32% are the private sector, 18% are in the public sector.
When we look at that private sector, which is really where we tend to operate more in, 60% of that, so that's about 12.5 million people are employed in the SME space, which is organizations of less than 250 people, and about 11 million are obviously the enterprise businesses, so more than 250. When we step back from that, what we see is that we see very different challenges faced by businesses, often determined by the size of the organizations. When we look at the enterprise businesses, they are really focused on how do we get the work done. We're talking about big programs of work vs perhaps the SME space. If you think about the 12.5 million people that are employed in organizations of less than 50 people, they're more focused on how do we just get a worker.
The reason I say all that is that we are really well set up in the U.K. with our total talent solutions offering. We obviously have an advanced specialist recruitment service, we have our outsourcing service, we have our consultancy service, and I think the individuals and the leadership there are really tight. When they're talking to clients, they're really in a position to provide a whole range of different solutions, and we need to be able to operate in both the SME and the enterprise markets, and they're doing that really well. I think that's been a big factor of success for the U.K. In terms of the other question, because bear with me, you talked about the fee rates.
Yeah. Look, the fee rates have held stable. I think there is more that we can do on the fee rates, and we're focused on that. Despite the challenges around the world, we're not really seeing what I would term a job flow challenge. What we're seeing is the movement of candidates. We're seeing skill shortages in the market. We're seeing there is still a prevailing lack of confidence for all the reasons that we know, and arguably, it requires even closer attention and more skill and relationship from us to be able to really work closely with the candidates to move them. I think there is some value in those fees that we need to be looking at, which is what we're going to be spending our time, both now and next year, trying to drive.
In terms of your first question about the productivity, the 8%, typically our wage inflation generally across the markets moves up 2%-3%, Steve, a year?
Yeah.
You could argue something between 5%-6% net.
Yeah.
Perfect. That's great. Thanks very much.
Thank you. As a reminder, if you'd like to ask a question, please press star one on your keypad. At this time, we have no further questions, so I'd like to hand back over to Toby for any closing remarks.
Thanks, everybody, for your time, and look forward to seeing you all soon. All the best.