International recruitment firm, SThree (STEM: LSE) reported second quarter net fees fell by 8% in constant currency (CC). For the H1 period, net fees decreased by 7% in constant currency.

The decline came amid an ongoing challenging backdrop and against a strong prior year performance, with H1 contract net fees down 4% in constant currency and now representing 84% of net fees. Permanent net fees tumbled by 18% in constant currency.

For the second quarter, contract net fees fell 6% while permanent net fees declined by 15%, in constant currency.

Timo Lehne, chief executive, said, “Against the challenges experienced by the sector, we are pleased with our trading performance over the past six months, with strong contract extensions partially offsetting continued soft new business activity. The group’s unique business model, centred on scarce STEM skills and flexible talent solutions, continues to be a source of strength, aligned to the strategic priorities of our clients and providing sizeable growth opportunities across all our key markets. We are well placed to take full advantage when the market returns.”

Across both Contract and Permanent, the group said it continued to see strong demand for engineering roles, with record net fees for engineering, driven primarily by the energy sector.

Renewables remains the fastest growing segment, up 15% (CC) year-on-year. Life sciences and technology performance continues to reflect ongoing market conditions and record comparatives for technology.

Regionally, the group saw strong growth in the Middle East and Asia, driven by an exceptional performance in Japan reflecting growth across all three of the group’s main skill verticals.

Within the group’s largest three markets, which represent 72% of net fees, the Netherlands achieved robust year-on-year growth due to a strong contribution from engineering, while the USA was down, driven by declines in life sciences and technology partially offset by a strong engineering performance, and Germany was also down reflecting levels of demand for technology skills.  

Net fees by geography

The group said it remains focused on being positioned to respond as the market changes, with group period-end headcount down slightly versus the end of the last financial year.

Lehne added, “We continue to execute our growth strategy, including the phased roll-out of our Technology Improvement Programme. Following our successful launch in the US, our deployment in Germany is well underway. We are excited about the significant enhancements this will bring across our group over the mid-to-long term, positioning us at the forefront of our industry.”

The company said performance for FY24 is currently expected to be in line with market expectations.

SThree said it will issue its FY24 half-year results for the six months ended 31 May 2024 on 23 July 2024.

SThree shares last traded at £418.63, down 0.80% on the day and 8.50% below its 52-week high of £457.50, set on 31 May 2024. The company has a market cap of £555.65 million.