Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Recruiter SThree posts higher gross profit as international growth offsets weak UK performance

SThree's UK and Ireland division saw gross profit fall 10% to £13mln in the quarter as employers continued to exercise caution amid Brexit uncertainty
SThree specialises in recruitment for STEM industries

Recruitment firm SThree PLC (LON:STHR) posted a 13% increase in quarterly gross profit as growth in international job markets mitigated a poor performance in Brexit-hit UK.

The company, which specialises in recruitment for the science, technology, engineering and mathematics (STEM) industries, said gross profit rose to £82.7mln in the third quarter ended August 31 from £73.7mln the same period a year ago.

Continental Europe was the key driver of growth with gross profit up 24% to £47mln while the US delivered an 8% increase in gross profit to £18.2mln and the Asia Pacific and the Middle East achieved a 16% gain to £4.5mln.

The UK and Ireland division, on the other hand, saw gross profit fall 10% to £13mln as employers continued to exercise caution amid Brexit uncertainty.

In terms of sectors, the company reported a higher gross profit in information and communication technology (ICT), energy, life sciences and engineering but a decline in the banking and finance industry.

READ: SThree delivers 'encouraging' first half supported by growth in US and Europe

Gross profit in contract job placements increased 14% to £60.4mln, outperforming permanent placements, which rose 8% to £22.3mln.

SThree 'confident' in its full year prospects

“We are pleased to have delivered another strong quarter, continuing the momentum of the second quarter, which was also up 13%,” said chief executive Gary Elden.

“The group is benefiting both from the broad geographic reach of its operations, with 84% of gross profit now generated in international markets, and from its focus on the best STEM markets.”

He added: "Looking ahead, trading conditions in the majority of our markets are encouraging and we enter the fourth quarter, our most significant trading quarter, with confidence in our full-year prospects."   

SThree ended the period with net debt of £24mln, up from £6.2mln in May, after paying a final dividend and incurring exceptional costs related to its relocation of support functions from London to Glasgow.   

Sales headcount for the group at the end of the quarter was up 7% on the previous year and up 3% versus the half year position.

Liberum raises target price, upgrades full-year estimates

Liberum maintained a 'buy' rating on the stock and raised its target price to 450p from 430p, saying the results were ahead of its expectations thanks to continued momentum in the US and EU businesses. 

"With an encouraging outlook for both these regions, combined with the potential for a sequential improvement in the UK, the company is well positioned going into 4Q18," the broker said. 

"We upgrade our FY18 PBT estimates by 5% and believe that this positive earnings momentum, alongside the group's attractive geographic and discipline exposure, should help support near-term share price performance."

View full STHR profile View Profile

Sthree Timeline

June 08 2012

Related Articles

credit cards
July 08 2018
The group is already seeing good progress at its US contact centre business
The river Thames
June 08 2018
No longer focused so much on drone technology, the high-tech survey and inspection specialist is so changed that it probably should change its name but management would rather spend the money growing the business
June 06 2018
Financial services have been especially strong and driven by fears over cybersecurity ...

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use