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UK – SThree half year revenue up, profits down, and office closures

15 July 2013

SThree (STHREE:LSE) the international recruitment specialist staffing business, released a trading result for the first half of 2013, showing revenue growth of +4.8% but an operating profit down -26.9% compared with the same period last year. The recruiter is among the 40 largest staffing firms in the world.

Revenue was down in the UK & Ireland from £120 million for the six months to 27 May 2012 to £117.2 for same period in 2013, but up from £128.1 million to £133.5 million in Continental Europe and from £30.2 million to £41 million in the rest of the world.

According to, the CEO, Gary Elden: “Against a backdrop of weaker macroeconomic conditions, we had a satisfactory first half. Contract, international and expansion of our newer sectors remained our strategic priorities in the period, along with a refocusing of elements of the business to ensure they are positioned to target growth markets more effectively.”

Gross profits were down in UK from £34.7 million in May 2012 to £30.5 million the following year. Across Continental Eurpe gross profit also fell; from £49.4 million in 2012 to £45.9 million in 2013, but increased in the rest of the world from £15.6 million to £17.5 million during the same period.

Mr Elden added, “We continued to invest in Contract sales headcount in growth markets, with a particular focus on Energy, up +48%, and Pharmaceuticals & Biotechnology, up +13%, since the start of the year. Allowing for the usual lag before these new hires become productive, we expect the full benefit of this investment to be felt in 2014. In Permanent, after a number of quarters of headcount decline, we are now investing selectively to preserve our capabilities, given the importance of an exposure to Permanent in recovering markets.”

It is reported that contract recruitment accounted for 54% of total recruitment during the first half of 2013. Day rates for contract workers, however, fell from £87 during H1 2012 to £82 this year, equating to a fall of -6.4% year-on-year.  

“Our balanced business mix between Contract and Permanent, continued drive to improve productivity and tight focus on growing teams only in selective sectors/ geographies, together with the savings expected from the restructuring programme, 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

Permanent placements decreased -13.4%, as a result of weaker macro-economic conditions. Average placement fees remained relatively consistent, year-on-year, at £12,637 compared with £12,668 during the same period last year.

“Our balanced business mix between Contract and Permanent, continued drive to improve productivity and tight focus on growing teams only in selective sectors/ geographies, together with the savings expected from the restructuring programme, 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,” Me Elden added.

“We have or we will exit from seven leases across Europe and the UK. The number of employees affected with be 50 employees from our support services, as well as 13 from our sales managements,” said Alex Smith, chief financial officer. 

The company has opened new offices in Tokyo, Berlin and Calgary taking to 67 offices in 20 countries. and increased headcount to 2,283 increased an increase of +4% on prior year end (2012: 2,188), driven by Rest of World. However, SThree also announced will cut about 8% of its support function jobs and it will shut three offices in France and four in the UK, as part of a restructuring that will reduce costs by approximately £8 million per year.

“Looking ahead, global economic conditions remain fragile and predicting the kind of market conditions the Group will face in the second half with any accuracy is extremely difficult,” added Mr Elden.

During early trading the share price fell -5.31% to 343.25 pence per share, an increase of +37.2% from a year ago. Based on stock price the company has a market value of £422.94 million. 

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