The Investment Column: Whitehead enjoys a feast

Consultancies are a feast or famine business. In boom times, they feed off clients' successes. In recession companies tend to cut spending on luxuries like third party advice.

Whitehead Mann, the recruitment consultancy, has enjoyed a feast since it floated last March. The shares, priced at 136p, hit a peak of 171.5p yesterday, up 13p, on the back of strong first-half figures. Efficiency gains and big contract wins meant pre-tax profits in the six months to September jumped by 42 per cent to pounds 1.6m, ahead of most forecasts.

The company looks good on fundamentals. It has strong client relationships - repeat business counts for almost four-fifths of its core executive search operation. And its commitment to building a global network means it should continue winning lucrative international contracts. With companies looking to fewer suppliers to meet their global staffing needs, Whitehead's international spread looks attractive.

But could Whitehead Mann survive an economic downturn? The answer is probably yes. The company looks less exposed to cyclical fluctuations than some. Around 70 per cent of it business comes from headhunting senior directors for about half the UK's FTSE 100 companies. Businesses need chairmen and finance directors just as much, if not more, in bad times, when lower ranking staff may be cut, as in a boom. Second, Whitehead is far flung and not exposed to the vagaries of any single economy. And Whitehead has a small, but fast growing and cyclical resistant IT recruitment operation.

But Whitehead is not completely insulated. The fortunes of its selection division, which advertises for jobs in the pounds 50k-pounds 100k salary range, and its human resources consultancy, tend to rise and fall with economic activity. On a forward rating of 13. Fairly priced.

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