Korn/Ferry Swings to 4th-Quarter Profit
Korn/Ferry International on Tuesday posted fiscal fourth-quarter profit of $8.7 million, reversing a year-earlier loss as the improving job market spurred increased demand for the executive search firm’s services.
The Century City firm also gave an upbeat outlook for the current quarter, and its shares reached a three-year high.
For the fiscal first quarter, Korn/Ferry forecast a better-than-expected profit, contrasted with a year-earlier loss, saying it expected the worldwide job market to continue to recover.
“[It was a] superb quarter, well above anything the Street was expecting,” said C.L. King & Associates Inc. analyst Ty Govatos. “The North American search business continues to strengthen month by month.”
Korn/Ferry earned $8.7 million, or 21 cents a share, for the quarter ended April 30. A year earlier, the company reported a loss of $2 million, or 5 cents.
The latest results were higher than the company’s earnings estimate in March of 10 cents to 16 cents a share.
Fee revenue rose 28.5% to $97.7 million.
Chief financial officers, chairmen and operating officers “all want to move positions to make more money, and every time they move, they need Korn/Ferry,” Govatos said.
Fee revenue from Korn/Ferry’s middle-management recruiting business, Futurestep, grew 24.7% to $10.1 million.
The executive search industry was among the hardest-hit sectors in the recent economic recession. Korn/Ferry saw revenue fall sharply as the tech boom withered.
The company forecast a profit of 12 cents to 17 cents a share on revenue of $90 million to $96 million for the first quarter. The forecast is higher than analysts’ estimate of 9 cents a share on revenue of $87.99 million, according to estimates by Reuters.
On Monday, Korn/Ferry said the Securities and Exchange Commission was probing payments by its outside auditor, Ernst & Young, to a company affiliated with a former director. Korn/Ferry said it believed Ernst & Young’s independence was not impaired and that it would cooperate with the inquiry.
Korn/Ferry’s stock closed up 52 cents at $16.50 on the New York Stock Exchange. Earlier in the day, the shares hit $16.98, the highest level since June 2001.
