Specialist recruitment firm SThree PLC (LON:STHR) announced the departure of chief executive Gary Elden as it said full-year profits will beat market expectations after a strong fourth quarter.
Elden will step down in the new year at some point before the company’s annual meeting in April after six years at the helm.
"I have been privileged to be part of SThree for almost 30 years and am proud to have led the group as CEO during a major period of growth and development,” he said.
"As today's results demonstrate, the company is in great shape to make further progress and I look forward to following its continued development as a shareholder.”
Continental Europe drives growth, UK hit by Brexit uncertainty
SThree, which specialises in recruitment for the science, technology, engineering and mathematics (STEM) sectors, expects full-year gross profit to increase 12% to £320.9mln after 12% growth in the fourth quarter.
Growth was led by Continental Europe, where gross profit rose 20% to £183.3mln in the year. Gross profit in the US edged up 8% to £66.6mln while the Asia and the Middle East region grew 11% to £18.0mln.
READ: Recruiter SThree posts higher gross profit as international growth offsets weak UK performance
The UK and Ireland division was the only weak spot with gross profit down 5% to £53mln, reflecting weaker business confidence amid Brexit uncertainty.
In terms of sectors, gross profit grew across information and communications technology, energy, engineering and life sciences but banking and finance dipped 1%.
Contract job placements accounted for most of the total with gross profit up 14% to £232mln while permanent placements increased 6% to £88.9mln.
SThree 'well positioned' for 2019
SThree now expects adjusted pre-tax profit for the year to be slightly ahead of the top end of the current market consensus range of £49.0mln to £51.4mln.
“The group is benefiting both from the broad geographic reach of its operations, with 83% of gross profit now generated in international markets, and from its focus on the best STEM markets, where the demand for niche, skilled candidates continues to be driven by a shortage of supply,” Elden said.
“Strong performances in Continental Europe, particularly from our market-leading businesses in the Netherlands and Germany, as well as the USA were key to the delivery of this result. “
Elden said the turbulence and pressure that the UK has experienced since the 2016 Brexit has increased this year but the company still delivered strong results.
Looking to 2019, he thinks the company is well positioned to “continue to benefit from the growth opportunities in our chosen STEM markets”.
Shares gained 5.3% to 274p in morning trading.
Liberum keeps 'buy' recommendation
Liberum maintained a ‘buy’ rating and target price of 450p.
“Although the announced departure of CEO Gary Elden is s surprise, it comes at a time when momentum in the business is strong and the strategic shift undertaken during his six-year tenure is paying off,” Liberum said.
The broker added: “We upgrade our FY18 PBT estimates by 1% and believe that this positive earnings momentum, alongside the group's attractive geographic and discipline exposure, should help support near-term share price performance.”