International staffing business and FTSE 250 constituent SThree (LSE: STHR) released a trading update today today, reporting further declines in profits and revenues in the third quarter, but said its UK business continued stabilising and month to month performance improved.
The group said the demand for its services continued declining in Q3, causing its gross profit for the period to fall about 34% year on year to £37.6 million, while UK gross profit plummeted 46%.
Contract profits slipped 28%, while permanent gross profit plummeted 49% year on year. At 30 August SThree had 4,190 contract runners, down 29.1% year on year, while average contractor gross profit per day rates were flat compared to last year and the first half. A total 1,395 permanent placements were made in Q3, down 45.3% year on year, while permanent placement fees declined 3% and 7.6% in the UK on a constant currency basis.
The international business continued slowing, as permanent placements declined 27.8% and contract runners reduced 15.1% year on year.
The group continued slashing costs, bringing its headcount down by a further 8.6% since the half year 2009, making for a year on year decrease of 34.1% to 1,506.
SThree said its cash position was strong as the group had net cash of about £40 million and expected to sign a new financing facility by the end of October 2009. The company is debtless and does not currently utilise its existing facilities.
While the trading conditions remained challenging in the quarter, SThree said it continued managing its business “with an eye on inevitable recovery,” while the UK business was showing some improvement.
“There are some signs of stability in our UK business when we look at our more recent month on month performance rather than the more challenging year on year comparatives...our strong cash position gives us the capacity to make prudent investments for the future and our flexible business model allows for a rapid re-scaling of the Group as soon as market conditions allow,” said CEO Russell Clements.
In the interim results released in July, SThree reported a 5% year on year decline in revenues, while earnings per share were down 46.6%.
The company was slightly lower in early trade today following the release of the update.