International recruitment firm, SThree (STHR: LSE) reported revenue for the half year ending 31 May 2019 of £653.3 million, an increase of 10% in constant currency compared to last year.

Growth in revenue exceeded the growth in net fees as SThree said its business continued to shift towards contract. During the H1 period, contract business represented 74% of the group net fees, up from 72% last year.

SThree’s net fee increase was bolstered by growth in international operations which now account for 86% of net fees generated. In the UK, net fees were down 9% in constant currency.

During the period, SThree announced that Marc Dorman would take over as CEO from 18 March 2019. Dorman was appointed following Gary Elden stepping down from the role after leading the company for six years. 

Earlier this month, SThree announced that Justin Hughes, Chief Operating Officer, will step down from the Board with effect from 1 July 2019.

The group added that the expected benefits of its restructuring and relocation of the majority of its London-based support functions to Glasgow are being realised. This restructuring is anticipated to realise cost savings in excess of £5 million per annum.

Net fees were broken down as follows.

Net fees by region

Continental Europe is the group’s largest region comprising Germany, Switzerland, Austria, Netherlands, Belgium, France, Luxembourg and Spain. The region delivered strong growth in the period with increasing net fees across all main country markets.

Regarding its UK & Ireland region, the group said, “We have put significant work into stabilising the region, the benefits of which are beginning to show.” Net fees in contract were down 6% in constant currency while permanent net fees declined 25% reflecting continued macro-economic and political uncertainty. 

The USA is the group’s second largest region. SThree said it continues to see further opportunities for growth in all its markets as STEM roles in the region continue to be highly sought after and are projected to grow by 10.8% between 2016 and 2026.

The group’s APAC & Middle East business principally includes Japan, Australia, Singapore and Dubai. APAC & ME represented 6% of group net fees, a slight increase from 5% at the end of 2018.

“Our largest region, Continental Europe, continued to grow well, alongside USA,” Dorman said. “Both of these regions have benefitted not only from capitalising on the wealth of opportunity available in their markets brought about by growing demand, but also from the strong delivery from our teams and strategic initiatives that have been put in place.”

“We have identified and focused on those areas of the business that need refinement,” Dorman said. “For example, in the UK, we are spending time driving and resourcing the specific areas of skills and industry sectors where we have the opportunity to get the best returns. We are in the process of capitalising on the insight we have into the market dynamics and focusing on allocating resources accordingly. Whilst these areas are a work in progress, we are confident in the ability of our teams to deliver growth. Ultimately, our focus is on execution across the business, based on informed and data-driven detail. We have plans in place to drive growth across all areas of the group.”

Looking ahead, Dorman added, “Overall, we are pleased with trading in the first half of the year, driven by our strategy to focus on STEM and Contract, our global market exposure and the entrepreneurial spirit of our dedicated colleagues. We will be building on this strategy, driving execution through detailed operational plans, in the period ahead. Notwithstanding the macro-economic backdrop of certain regions, the group remains well positioned for the second half, and the Board's expectations for the full year remain unchanged.”

As of last trade, SThree traded at £278.75, up 2.86% on the day and 13.78% above the 52 week low of £245.00 set on 28 December 2018. Based on its current share price the company has a market value of £354.91 million.