SThree has mixed Q3 due to EU referendum

Recruitment firm SThree experienced a successive mixed quarter as sales in continental Europe grew, but was affected by the EU referendum and a downturn in the energy sector.

For the third quarter ended 31 August, gross profit was down 2% to £66m year-on-year, but was ahead by 2% to £61m excluding sales from the energy sector.

The UK market was affected by the slowdown in the banking and finance sector due to the uncertainty surrounding the Brexit result from the EU referendum, as gross profit was down 9% year-on-year to £15.8m, but continental Europe grew by 12% to £32.9m year-on-year.

Chief executive Gary Elden, said: “The mixed trading conditions we identified at the half-year stage continued in the third quarter...Continental Europe once again grew strongly, underpinned by a very pleasing performance in Germany, Austria and Switzerland, where gross profit was ahead by 17% year-on-year.

“However, the uncertainty created by the EU referendum impacted our UK business, and our US growth rate reflects the ongoing weakness in the energy and banking and finance markets."

About 76% of the company's profit was generated outside of the UK and Ireland, up from 72% in 2015.

The AIM-listed company said conditions in the energy market remain challenging, as gross profit was down 32%.

There was growth across the information technology sector with revenue increasing by 8% to £29.3m year-on-year.

US gross profit was up 14% to £13.5m, compared to the second quarter but down 10% year-on-year, due to tough trading conditions in the energy and banking and finance sectors.

Gross profit from contract jobs was up 6% to £45.4m, but down 15% to £20.6m for permanent jobs year-on-year, which is broadly in line with the 12% decrease in average sales.

The company said its expectations for the current full financial year remains unchanged.

Elden added: "Looking ahead, the continued momentum of our contract business, the strength of our performance in continental Europe and the benefit of restructuring measures taken earlier in the year, leave us well-positioned for our seasonally most significant fourth quarter."

Shares in SThree were down 0.51% to 248.73p at 0806 BST.