SThree lifts expectations after solid first half

Specialist recruitment firm SThree reported a 23% improvement in net fees in its second quarter on Monday, against a non-Covid impacted comparative period, as it hiked its full-year profit expectations.

The London-listed firm said that for the first half ended 31 May, group net fees were up 25% year-on-year.

It reported “very strong” year-on-year growth in its three largest markets, with Germany up 22%, the US up 21%, and the Netherlands up 41%.

Those largest three countries represented 73% of group net fees, with Germany representing 31%, the US 25%, and the Netherlands 17%.

There was also “strong” double-digit growth across all of the company’s key sectors, with technology up 30%, life sciences up 16%, and engineering up 27%.0

Contract and permanent net fees for the first half were 30% and 11% higher, respectively.

SThree said its contractor order book was 35% higher year-on-year, providing it with “good visibility” into the second half, and underpinning continued confidence in its near-term outlook.

The company said its balance sheet was “robust”, with net cash as at 31 May totalling £48m, in line with its first half result last year.

Its board said it now expected profit before tax for the 12 months ended 30 November would be at least 5% ahead of market consensus.

“Our group has delivered another excellent quarter of growth, driven by successes across all key regions and STEM disciplines,” said chief executive Timo Lehne.

“As a result of this strong performance, we are now trading ahead of market expectations for the 2022 full year.

“Our business had largely recovered from the pandemic in the second quarter last year, so this is the first period in which we have been able to provide a true like-for-like comparison; - net fee growth of 23% in the second quarter is therefore a significant achievement.”

Lehne said the company’s focus on flexible working, both independent and employed contractors, was delivering, adding that for the second consecutive quarter it could report that all regions, including the UK, demonstrated “clear” positive momentum.

“Good progress has also been made in the execution of our strategy, with the planned investment in our people, talent acquisition and digital infrastructure moving forward as planned.

“This investment is designed to underpin our long-term success, with most of the cost in the current year falling in the second half of the year, as expected.”

SThree was mindful of macroeconomic uncertainties which were currently being felt across its key regions and beyond, Timo Lehne said, with all developments being monitored “closely”, alongside lead indicators of performance.

“However, the demand from our clients for people with STEM skills, together with our strong contractor order book, underpins our confidence in the future.”

At 0915 BST, shares in SThree were up 6.9% at 341p.

Reporting by Josh White at Sharecast.com.