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View All NewsUK – SThree first quarter gross profit growth boosted by Continental Europe, but sees weakness in UK market
International recruitment firm, SThree (STHR: LSE) published a trading update for the first quarter ended 28 February 2018 with group gross profit up 8% year-on-year in constant currency.
Group gross profit was boosted by growth in Continental Europe and sector-wide growth, particularly in Life Sciences, ICT, Engineering, and Energy. SThree added that growth in Contract remained the driving force of the group’s gross profit growth.
The company also reported that 82% of group gross profit was generated from markets outside the UK & Ireland.
SThree reported group gross profit for Q1 was as follows.
| (£ millions) | Q1 2018 | Q1 2017 | Constant Currency Change |
| Contract | 50.5 | 45.6 | 11% |
| Permanent | 19.8 | 19.5 | 2% |
| Group | 70.3 | 65.1 | 8% |
Gross Profit by region was as follows.
| (£ millions) | Q1 2018 | Q1 2017 | Constant Currency Change |
| UK & Ireland | 12.7 | 13.0 | -3% |
| Continental Europe | 40.3 | 34.0 | 15% |
| USA | 13.1 | 14.2 | 1% |
| APAC and Middle East | 4.2 | 3.9 | 15% |
Gross Profit by sector was as follows.
| (£ millions) | Q1 2018 | Q1 2017 | Constant Currency Change |
| ICT | 31.8 | 29.5 | 5% |
| Banking & Finance | 9.5 | 9.8 | -3% |
| Energy | 6.1 | 5.1 | 35% |
| Engineering | 6.7 | 5.6 | 14% |
| Life Sciences | 14.8 | 14.1 | 9% |
| Other Sectors | 1.4 | 1.0 | 32% |
Gary Elden, Chief Executive, commented, "While Q1 is our least significant quarter, we've made an encouraging start to the new financial year. Our Contract business continues to go from strength to strength, with GP increased by 11% in Q1, driven by continued strong growth in Continental Europe, especially key markets such as the Netherlands and Germany. Growth in Contract GP from our Life Sciences, ICT and Energy businesses has also been particularly pleasing.”
"As anticipated, the growth rate in our US business reflected the tough prior year comparatives from Q1 2017,” Elden said. “The market opportunity in the USA remains very strong and we expect to see an improving performance from this business.
"Our Permanent GP increased by 2%, driven by strong performances in Germany up 13% and in Japan up 75%, (in constant currency)” Elden added.
"Looking ahead, we will continue to invest in our highest performing teams, consistent with our vision to be the number one STEM (science, technology, engineering, mathematics) talent provider in the best STEM markets. Our focus on Contract and the continued strength of our performance in Continental Europe and across key sectors leave us confident that there are good growth opportunities available for us this year,” Elden said.
As of last trade SThree traded at £350.50, up 0.14% on the day and 10.13% below its 52-week high of £390.00, set on 12 January 2018. Based on its current share price the company has a market value of £455.38 million.