SThree interim profit jumps as Continental Europe, US perform well

In the half year to 31 May, gross profit was up 10% to £148.4m, while pre-tax profit was 6% higher at £17.8m, on revenue of £585.8m, up 12% on the same period a year ago.

Gross profit in the contract business was up 13% to £106.7m and gross profit in the permanent business was 4% firmer at £41.7m.

In Continental Europe, gross profit was up 18%, but the UK & Ireland operations saw a 2% drop on the year.

Chief executive officer Gary Elden said: "We have delivered an encouraging first half performance, driven by further strong growth in contract, and our two biggest regions, Continental Europe and the USA.

"To build on this growth, we are continuing to invest in our highest performing teams, consistent with our vision to be the number one STEM talent provider in the best STEM markets. The group is performing well and we are making good progress against our five-year growth plan."

SThree said trading since the period end has continued the positive trend and the group is "well-positioned" as it enters its seasonally more significant second half.

Liberum reiterated its 'buy' rating on SThree and nudged up its price target to 430p from 425p as it said the results were "in line" and the outlook "encouraging".

"The key highlight from the 1H18 results was that the momentum delivered by the business has continued into the first weeks of 2H18. Although too early to drive material forecast upgrades, we take the opportunity to increase our FY18 EBIT estimate by 2%.

"We also see SThree as being well-positioned longer term, given its exposure to STEM markets and the more resilient contract business. In our view, the shares offer the most attractive risk-reward profile in the sector, and we reiterate our buy rating and increase our TP."

At 1235 BST, the shares were up 0.7% to 350p.