SThree PLC (STHR: LSE) released a trading update for the Q3 period, reporting continuing “mixed trading conditions.”

Group gross profit ('GP') was down 2% in constant currency, year-on-year (YoY) and ahead by 2% (CC) excluding Energy. Q3 GP was impacted by the ongoing weak activity in the Energy market and a continuation of the more difficult market conditions in Banking & Finance that was identified in Q2. Meanwhile, ICT reported an increase of 8% (CC) for GP, YoY. Sales headcount was down 3% YoY and down 7% on the year-end position, as SThree reacted to the changing market conditions.

Contract GP was up 6% (CC) YoY, or up 9% (CC) excluding Energy. A large proportion of this growth was driven by Continental Europe, which was up 16% (CC), offsetting UK & Ireland which recorded a decrease of 4% (CC). US Contract GP was up by 5% (CC), with ICT increasing 31% (CC) and Life Sciences growing 17% (CC) offset by Energy decreasing 26% (CC) and Banking & Finance 6% (CC) lower YoY. 

Permanent GP was down 15% (CC) YoY. Although lower overall, Q3 saw robust growth in DACH (Germany, Austria and Switzerland) and France, up 7% (CC) and 3% (CC) respectively, offsetting a weaker performance in the US, where GP was down 30% (CC) YoY.

Contract represents 69% of the company’s gross profit compared to 64% during Q3 2015 while Permanent represents 31% compared to 36% during Q3 2016.

UK & Ireland permanent GP was down 23% (CC) reflecting the group’s previous strategic decision to downsize UK permanent headcount and focus on productivity improvements. Permanent productivity improved in both the UK and Continental Europe during the period. Banking & Finance permanent GP was down 22% (CC) YoY and Energy permanent GP was down 87% (CC) YoY. Permanent productivity per sales head was down 4% (CC) YoY in the quarter, with average heads down 12%. Average Group sales heads were down 1% YoY.

“The mixed trading conditions we identified at the half-year stage continued in Q3,” Gary Elden, Chief Executive of SThree, said. “Our Contract business continued to perform well overall, with GP increasing by 6% (CC) year on year. Continental Europe once again grew strongly, underpinned by a very pleasing performance in DACH, where GP was ahead by 17% (CC) year on year. However, the uncertainty created by the EU Referendum impacted our UK business, and our USA growth rate reflects the ongoing weakness in the Energy and Banking & Finance markets.”

“Looking ahead, the continued momentum of our Contract business, the strength of our performance in Continental Europe and the benefit of restructuring measures taken earlier in the year, leave us well-positioned for our seasonally most significant fourth quarter. Our expectations for the full year are unchanged,” Elden said.

 In trading today, SThree traded at £248.73, down 0.51% on the day and 9.91% above its 52-week low of £226.30, set on 12 July 2016. Based on its current share price the company has a market value of £319.93 million.