SThree on track despite ongoing sales weakness

STEM-focused recruitment firm SThree said it remains on track for the full year but reported a continued decline in net fees in its third quarter as the placing of permanent jobs continued to decline.

The company, whose biggest markets are the Netherlands, Germany and the US, said net fees for the third quarter were down 7% year-on-year at £103m, due to a strong comparative period in 2022 and "ongoing global macro-economic weakness". Fees were down 7% in the second quarter too.

SThree is transitioning more of its business to cover Contract work placings, which now represent 84% of the group's total net fees compared with 77% the same time last year. Contract net fees were flat year-on-year, a slight improvement from the 1% decline in the second quarter.

However, the decline in Permanent net fees worsened to -31%, from -25%, which SThree said "reflect[s] global market conditions and the strategic transition from Permanent to Contract in several markets, with average Permanent headcount for the quarter down 21% YoY."

"We continue to deliver a resilient performance, underpinned by the group's strategic focus on Contract," said chief executive Timo Lehne.

"While the wider environment remains uncertain, we are encouraged by our sequentially improving new placement performance and strong Contract extensions, demonstrating our clients' sustained demand for critical STEM skills."

The stock was up 2% in early deals on Tuesday at 366p.