SThree PLC (LSE:STEM) shares slumped 21% after the science and engineering recruiter warned that persistent weakness in new business activity would drag on earnings into next year.
The London-listed group reported a 12% fall in third-quarter net fees compared to a year ago, though with a “modest sequential improvement” and a return to growth in the US.
Contract work, which makes up the bulk of activity, slipped 13%, while permanent hiring fell 5% for the STEM (science, tech, engineering and maths) jobs specialist.
SThree reiterated guidance for profit before tax of £25 million for the year to November but said subdued demand would cut the following year consensus by around £20 million, implying profit of just £10 million.
Chief executive Timo Lehne said the group was seeing “pockets of improving momentum” in markets such as the US and Asia, but Germany and the Netherlands remained weak.
With its Technology Improvement Programme nearly complete, SThree plans to invest in next-generation AI tools and further cost optimisation, which it said would strengthen efficiency and scalability. Net cash stood at £42 million at the quarter end.