SThree reports record performance in final results

Specialist recruiter SThree reported a “record performance” in its final results on Monday, with net fees rising 19% at constant currency year-on-year to £355.7m - an all-time high.

The London-listed firm reported “strong” growth of 23% in Germany, 24% in the United States, and 19% in the Netherlands, which are its three largest markets and account for 74% of group net fees.

Contract and permanent net fees were up 17% and 24% year-on-year, respectively, with contract net fees representing 75% of group net fees, compared to 76% in 2020, with the contractor order book up 43% year-on-year.

SThree reported a record adjusted profit before tax of £60m for the group, up 111% year-on-year.

The board described the balance sheet as “robust”, balance sheet, with net cash totalling £58m at year-end on 30 November, up from £50m at the end of the 2020 financial year.

It proposed a final dividend of 8p per share, up from 5p a year earlier, taking the full-year dividend to 11p from 5p year-on-year.

That was in line with the company’s dividend cover target of between 2.5x and 3.0x, as previously communicated.

SThree said the strength of its contractor order book and recent trading was tracking ahead of expectations, with the directors now anticipating double-digit net fee and profit growth for 2022.

On the environmental, social and governance front, SThree said its renewables business - accounting for 6% of net fees - was up 22% from 2020, which was ahead of its target to double the share of that business from 2019 to 2024.

Looking at the pre-pandemic comparator in 2019, SThree noted that full-year net fees were up 9%, with its three largest markets of Germany, the US and the Netherlands all up “strongly”, and adjusted profit before tax rising 7%.

“Our record-breaking full-year performance reported today demonstrates that we have a robust strategy focusing on STEM and flexible working, implemented by a talented management team, and the hard work of our people globally,” said interim chief executive officer Timo Lehne.

“As the market rebounded in 2021 following the impact of Covid-19, we saw demand for STEM skills increase across all of our key markets.

“Whether it is engineers building green infrastructure, developers aiding digital transformation or the scientists helping to develop the next life-changing drug, we are proud to have placed more than 22,000 skilled people and, combined with our ESG efforts, we impacted over 33,000 lives this financial year.”

Lehne said that within the firm’s contractor markets, it was seeing particular client demand for its employed contractor model - a market segment where it was “leading” in many countries, and now accounted for 32% of group net fees.

“I am confident and excited about the future of SThree - momentum is strong and demand for the talent we provide is expanding, driving anticipated double-digit growth in 2022.

“We are well-positioned, we demonstrated our ability to navigate through unforeseen challenges, such as Covid-19, and we continue to evolve our delivery model.”

Timo Lehne said SThree would further invest in its infrastructure and people in 2022, enhancing its platform to drive accelerated margins in future years.

“We remain positive about our growth prospects as we continue to position ourselves as the leading STEM talent provider in the best global STEM markets.”

At 0920 GMT, shares in SThree were up 9.46% at 457p.