SThree plc (STHR:LSE) has announced that CEO, Gary Elden, will step down early in the new year following a strong finish to the year with Group gross profit up 12% for both Q4 and for FY18.

The exact date of Elden’s departure is yet to be determined but expected to be by the time of the Company's AGM in April. A process to appoint his successor is now underway. He commented: “I have been privileged to be part of SThree for almost 30 years and am proud to have led the Group as CEO during a major period of growth and development. As today's results demonstrate, the Company is in great shape to make further progress, and I look forward to following its continued development as a shareholder”.

Group gross profit for the year was up 12% with growth across all regions except the UK & Ireland (down 5%). However, in the UK&I business, SThree did manage to drive improvements in productivity.

Contract gross profit was up 14%, with growth across all sectors. Contract growth was driven by Continental Europe, which was up 22% and the USA up 14%. Continental Europe and the USA combined now represent 78% of the company’s Contract gross profit (2017: 74%).

Permanent gross profit was up 6%, driven by Continental Europe (up 15%) and Japan (up 88%). This progress was offset by the USA which was down 5% against strong comparatives in the previous year and UK&I. As expected, UK&I permanent gross profit was down 20%, following the planned restructure of the business in early Q2, which reduced the average sales headcount for the year by 25%. Permanent productivity across the Group improved by 7% over last year, as a result of the focus on the best performing Permanent markets.

Headcount was up 3% to 2,332, with Contract up 8%, in line with the Group's strategy, and Permanent down 6%. Contract represented 68% of total sales headcount at the period end.  Sequentially vs Q3, period end, sales headcount was up 3%, with Continental Europe up 5%, USA up 1% and UK&I level. Average Group sales headcount for the year was up 8% with Continental Europe up 15% and the USA up 11%.

SThree reported that the move of its London-based support functions to Glasgow is progressing well with completion expected in Q1 2019.

Gary Elden, commented: "We are pleased to have delivered another strong quarter in Q4 continuing the momentum from Q2 and Q3, resulting in an overall GP result for the year of +12%. The Group is benefiting both from the broad geographic reach of its operations, with 83% of GP now generated in international markets, and from its focus on the best STEM markets, where the demand for niche, skilled candidates continues to be driven by a shortage of supply.”

"At the start of 2018 I stated that after two years of turbulent political, market and economic pressure, we entered the year in good shape. That turbulence and pressure has increased throughout the year and yet we have delivered strong results. Looking ahead to 2019, we are in better shape, and well positioned to continue to benefit from the growth opportunities in our chosen STEM markets.

Gross Profit by Region

Gross Profit by Segment

*Includes Procurement & Supply Chain and Sales & Marketing

Commenting on Elden’s departure, James Bilefield, SThree’s Chairman, said: "Gary has made a significant contribution to SThree since joining the Group in 1990, before being appointed to the Board in July 2008 and to the role of CEO in January 2013.  On behalf of the Board I would like to thank him for his unswerving commitment over the last three decades.  During his tenure as CEO, SThree has more than doubled its profitability and has scaled significantly in size and scope around the world, becoming a leading player in the STEM recruitment market.  Gary will leave SThree with a strong and experienced leadership team focused on delivering SThree's strategic priorities, and we have a clear and rigorous process in place to ensure a smooth transition to his successor”. 

Looking ahead, SThree now expects adjusted pre-tax profit for the year to be slightly ahead of the top end of the current market consensus range of £49.0 million to £51.4 million.

As of last trade, SThree PLC (STHR:LSE) traded at £271.00, 7.46% above its 52-week low of £252.19, set on 12 December 2018. Based on its current share price the company has a market value of £340 million.