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UK – SThree gross profit falls but contract recruitment grows

07 June 2013

SThree (STHREE:LSE), the international specialist staffing business, today issued a trading update for the half year ending May 2013, announcing that group gross profit has fallen by -6% compared with a year ago. The recruiter is among the 40 largest staffing firms in the world.

SThree Chief Executive, Gary Elden, said: “Against a backdrop of weaker macroeconomic conditions, we have had a satisfactory first half. We have continued to invest in sales headcount in growth markets, with particular focus on contract heads in Energy (+24%), and in Pharmaceuticals & Biotechnology (+15%), since the start of the year. This investment should provide a further growth driver as these new hires become productive and build their contract books through the second half and into 2014.”

Whereas permanent gross profit decreased -15% year-on-year, contract gross profit is one of the few areas of growth, experiencing a +3% increase year-on-year. In comparison with last year, sales have increased from £49.1 million to £50.6 million in H1 2013.

A decrease of -5% contract gross profit in the UK & Ireland was offset by a +3% increase in Continental Europe and a +44% increase across the rest of the world year-on-year. Contractor gross profit was further reduced by a -6% decline in average ‘per day’ rates, as a result of fee pressure from more mature market chains and certain sectors, notably banking.

The reduction of permanent gross profit is attributed to continued weakness in the UK & Ireland (-24%), the Benelux countries (-27%) and France (-41%), as these markets continues to slow. A decline across Asia / Pacific (-25%) was offset by growth in the Middle East (+19%) and in the Americas (+16%). Average permanent placement fees remained robust during the quarter.

The group now generates 68% of gross profit from markets outside the UK & Ireland, an increase of +3% compared with 2012.

“Our clear strategic focus and balanced business model between permanent and contract give us confidence that we will make the best of the market opportunity in the second half, whilst managing the business prudently for the medium term”, said Mr Elden.

In early trading, the company’s share price fell by nearly -5% to 338.75 pence, an increase of +1% from a year ago. Based on this stock price, the firm has a market value of £434.57 million. 

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