Shares in AIM-traded specialist recruiter Hydrogen shed 27 per cent of their value today, dropping 52.5p to 142.5p, following a profits alert prompted by the slowdown in the investment banking market.

In a trading update covering the year to date, Hydrogen chairman Ian Temple said the year had actually started well, with the company enjoying good trading in most divisions. However, recent poor trading conditions in the investment banking market, which speaks for 20 per cent of the company’s net fee income (gross profits), ‘have become increasingly challenging’. And though Hydrogen has switched the focus of its resources from this market towards other disciplines and international recruitment, ‘the shortfall against budget has not been fully mitigated’.

Overall, the company now says NFI for the first half of 2008 will be lower than the record £16.9 million figure it reported a year ago, and if current poor trading persists, first-half and full-year pre-tax profits will be lower than for 2007.

Despite the profits disappointment, Temple insists that the business, which grew 2007 profits by more than 30 per cent to £6.1 million pre-tax, remains in rude health with a strong balance sheet and ‘is now better positioned than ever’ to capitalise on opportunities that come its way.

Trading on a 52-week low of 142.5p, versus a high of 295p, the shares value Hydrogen at less than £33 million.

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