Specialist recruiter SThree plc reported revenue of £1.1 billion for the full year ended 30 November, an increase of 9% on a constant currency basis.

The group highlighted strong performances in Continental Europe and the US which helped boost gross profit, however SThree stated gross profit growth in the UK and Ireland remained challenging.

SThree reported that 81% of Gross Profit is now generated outside of UK and Ireland, compared to 75% last year. Meanwhile, Contract gross profit was up 10% (CC), compared to last year with growth across all sectors. Contract now accounts for 71% of group gross profit, compared to 67% last year. Permanent gross profit was down 8% (CC), compared to last year.

Operating profit declined by 3% and the company continues to implement cost-cutting measures as part of a UK-focused restructuring, including plans to move global support staff from London to Glasgow, a move forecast to deliver annualised savings of between £4 million to £5 million from 2019 onwards. However, the company reported that non-exceptional restructuring costs as well as increased investment meant that the group’s cost base increased in 2017.

Revenue for the group was broken down as follows.

SThree stated that it experienced a challenging year in the UK & Ireland region in 2017. Market confidence was affected by Brexit negotiations and the UK’s snap general election, leading to a decline in both permanent and contract divisions, according to the group. Contract gross profit in the UK and Ireland was down 11% (CC), y-o-y, while Permanent declined 22% (CC), y-o-y.

“In the UK, we enter 2018 against a background of continued uncertainty. Increasing inflation and supressed GDP growth rates for the UK being in the forefront of our minds, we expect to hold UK&I headcount broadly flat this year and to focus on maximising the profitability of the business,” the group stated. “We expect to retain a flexible approach to resource allocation to maximise the opportunities available in certain sectors and to adapt to all legislative changes in the region as required, including a proposed expansion of changes to the IR35 Intermediaries Legislation to the private sector in 2019.”

In Continental Europe, Contract gross profit was up 17% (CC) over the year, however Permanent declined by 7% (CC). SThree announced that overall it had delivered strong growth in gross profit for Continental Europe, supported by strong labour markets, a shortage of STEM candidates, low unemployment and rising incomes. The group stated it will continue to invest in Contract throughout 2018.

In the US, now the group’s second largest region, representing 22% of group GP, Contract was up 21% (CC) and Permanent also increased by 12% (CC), year-on-year. Looking ahead, SThree stated that it expects to continue strong growth in the US.

For Asia Pacific and the Middle East, the group’s smallest region, Contract gross profit was up 24% (CC) while permanent was down 22% (CC).

Revenue by recruitment classification was as follows.

Recruitment by sector was broken down as follows.

"We have delivered an encouraging overall result for the year, with a strong finish in the final quarter,” Gary Elden, CEO, said. “Pleasing performances in the USA and Continental Europe, particularly from our market-leading businesses in the Netherlands and Germany, were key to this result. With 81% of our business now generated outside the UK and 71% of our GP generated by our more resilient Contract business, our business profile has changed significantly over recent years. After two years of turbulent political, market and economic conditions, we enter 2018 in good shape, with a clear vision to be the number one STEM talent provider in the best STEM markets.”

“Permanent recruitment is more sensitive to overall market sentiment and has been hit harder by the political, market and economic uncertainty of recent years. In response, we have actively reduced Permanent headcount in certain markets in order to improve overall profitability in our Permanent business,” Elden said. “Over the years, this has meant restructuring our UK, Benelux & France, USA, APAC & ME, Oil & Gas and Banking & Finance businesses.  In markets with significant Permanent opportunity such as the USA and Germany we continue to maintain a strong Permanent offering.”

"Looking ahead to 2018, the momentum of our contract business and the strength of our performances in the USA and Continental Europe leave us well-positioned for further growth," Elden said.

In trading today SThree traded at £368.00, down 1.08% on the day and 5.64% 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 £483.95 million.