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UK – SThree profits fall as employers cut back on permanent staff

08 March 2013

Specialist ICT recruiter SThree (STHR:LSE) said first-quarter gross profit fell -3% to £45.5 million because of companies cutting back on permanent hires across the UK and Europe. Gross profit from permanent recruitment dropped a sharp -12% to £20.9 million due to a slowdown in the UK, France and the Benelux countries.

Contracting temporary staff proved to be a more lucrative business as gross profit grew +6% to £24.5 million in the period. Contract gross profit rose across continental Europe by +6% and by +53% in the Rest of World region. But demand for contractors in the UK & Ireland dwindled with gross profit falling by -4%.  

The firm now generates the majority of profits from outside its domestic market where gross profit dropped -12% to £14.6 million. Internationally, gross profit improved by +2% to £30.9 million.

The firm saw strong performance from energy & engineering as well as pharmaceuticals & biotechnology sectors in the quarter.

Chief executive, Gary Elden, said: “Against a backdrop of weaker macroeconomic conditions, we have made a solid start to the year, in what is, for seasonal reasons, always our least significant quarter.

“Our contract division, which comprised 54% of gross profits in the quarter, up from 49% in the prior year, benefited from a greater strategic focus and its  performance was pleasing, with gross profit ahead by 6% year on year.  Permanent had a more challenging quarter, as client and candidate confidence weakened from fourth quarter levels in a number of key markets.”

Looking ahead, Mr Elden said the company will make the best of market opportunities in 2013.

In early trading, the company’s share price fell -2% to 358.75 pence, a +26% increase from a year ago. Based on its stock price, SThree has a market value of £449.64 million. 


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