Specialist recruiter SThree PLC (LON:STHR) said it expects full year profits to be ahead of market forecasts after a robust third quarter performance.
The company, which specialises in staffing services for the science, technology, engineering and mathematics industries, reported a 5% increase in gross profit to £73.7mln in the quarter to 31 August, accelerating slightly from 4% growth in the second quarter.
Contract employment gross profit rose 9% to £52.1mln driven by growth in engineering and life sciences, offseting a 6% decline in permanent staffing to £20.6mln.
The UK and Ireland division was the only region that suffered a decline in gross profit as employers exercised caution amid Brexit uncertainty. Gross profit in the business dropped 10% to £14.5mln, though it marked an improvement from the 14% decrease reported in the previous quarter.
The US and Continental Europe delivered the most growth among the group’s markets with gross profit rising 20% to £17.3mln and 6% to £37.9mln, respectively. In the Asia Pacific and Middle East gross profit edged up 1% to £4.0mln.
“A robust performance in continental Europe and further strong growth in the USA were particular highlights and our contract business is continuing to drive growth across the group,” said chief executive Gary Elden.
Upbeat on full year prospects
"We are well-positioned for the final quarter and now expect to deliver a full year result ahead of current consensus.”
SThree said the consensus forecast for the year to 30 November 2017 is £42.4mln, with a range of £39.3mln to £45.6mln.
Liberum repeated a 'buy' rating and raised its target price to 400p from 390p, saying the third quarter was ahead of its expectations with continued momentum in the US and in Europe.
"With an encouraging outlook for both these regions, and signs that the UK may have reached a point of inflection, the company is well positioned going into the fourth quarter," Liberum said.
"We upgrade our fiscal year 2017 estimates by 4% and believe that this positive earnings momentum, alongside the group's attractive geographic and discipline exposure, should help support near term share price performance."