Robert Walters, chief executive of the global recruitment and outsourcing business of the same name, has praised the resilience of his company in demanding economic conditions.

However, full-year results for the year ending 31 December 2001 showed increases in turnover and gross profit had been dented by falling operating and pre-tax profits.

Shares dropped by 3.5p to 116.5p as the stock market reacted to the disappointing news.

Walters said: ‘I believe that in a very difficult year for the recruitment industry our business has shown resilience.

‘Our permanent business has been affected by the economic slowdown, but our contract business has held up extremely well and provided us with an important buffer in weak economic conditions.’

Sales continued to be flat during the first quarter of 2002, Walters added.

The £1.5m cost incurred by an aborted technology project hit operating profits, which dropped to £6.3m in 2001 from £14m in 2000.

In 2000, the organisation’s board approved a £6m online global database system linking front and back offices across the company’s offices.

However the company abandoned the project because of ‘rapidly worsening market conditions’.

Operating profits were also hit by an increase in administration expenses incurred as a result of Walters’ acquisition of Australian management services company, Dunhill.

Investment in new consultants and development of Walters’ managed agency, Resource Solutions, also contributed to the increase in cost base.

The statement also admitted that the slowdown in business had resulted in 15% of the company’s staff being made redundant.

Turnover increased to £253m in 2001 from £216.8m in 2000 and gross profit increased to £65.2m from £63.5m.

But pre-tax profits dropped from £18.3m in 2000 to £6.5m, caused because a higher proportion of profits fell in the UK in 2000, when Walters sold its stake in ailing online recruiter, StepStone.