Whitehead Mann dives 25% on banking sector downturn

Shares in the headhunter Whitehead Mann slumped 25 per cent yesterday after the company warned the downturn in the banking sector had taken its toll on its key executive search business.

The alert came as the company confirmed that Anna Mann, its founder and one of the most powerful players in the City, would be leaving in March of next year after all.

Ms Mann, responsible for hundreds of FTSE 100 executive appointments, had been in talks to stay on after announcing last year she wanted to retire next Spring. Publicity-shy, there are few photographs of Ms Mann and she does not give interviews. Her reputation in the industry, though, is unrivalled and recent successes include putting Clara Furse into the London Stock Exchange, Sir Christopher Bland into BT and finding Luc Vandevelde for Marks & Spencer.

Whitehead Mann tried to play down her departure yesterday. "In 1997, when the business floated less than five people accounted for 70 per cent of the revenue. Today 50 people account for 70 per cent of the revenue," Stephen Lawrence, the chief executive, said. "We're no longer dependant on one or two key individuals and Anna and her whole team account for less than 8 per cent of revenue."

The company warned yesterday that operating profits, before exceptional items, for the year to 31 March would be "materially" below current market expectations. The stock closed down 27.5p at 82.5p.

It expects sales to be in line with current forecasts of about £65.5m but profits are now expected to be more like £10m – some £2.5m lower than previous forecasts. Next year, it predicts sales will be flat.

The company responded to the downturn by slashing its final dividend to 2.5p from 8p last year, producing a payout of 7p for the whole year down from 13.6p the year before. Revenue had remained "relatively stable" on a month-by-month basis.

Whitehead Mann also announced it had sold its Munich arm to management for a nominal sum plus liabilities – leaving it with operations in London, New York, Paris and Hong Kong.