SThree profit up 11% in first half as Europe, US perform well

In the six months to 31 May, gross profit rose to £148.4m from £134.4m in the same period a year ago, with profit in the contract business up 14% to £106.7m and profit in the permanent business up 4% to £41.7m.

Continental Europe saw gross profits increase 18% to £83.9m, while profit in the USA was 9% higher at £29.5m, helping to offset a 2% drop in the UK and Ireland to £26.5m. In Asia Pacific and the Middle East, meanwhile, profit rose 8% to £8.5m.

Chief executive Gary Elden said: "We are pleased to have delivered an encouraging first half performance, with our Continental Europe and USA businesses, in particular, showing strong growth through the second quarter.

"Our contract business continues to grow robustly across all sectors, with Continental Europe and the USA both delivering double digit growth in gross profit. Permanent achieved an improved performance during the first half, driven primarily by Continental Europe but also by our small and fast-growing business in Japan.

"We are continuing to invest in headcount in our high performing teams, consistent with our vision to be the number one STEM talent provider in the best STEM markets. We remain on track with the delivery of our five-year growth strategy which we outlined at the Capital Markets Day in November 2017."

The group said its expectations for the full-year remain unchanged.

Liberum said that with the outlook for the Continental Europe and US businesses remaining strong, and signs that the UK may have reached a point of inflection, the company is well positioned to deliver attractive growth in FY18.

"Given the weighting of profitability within the business, we refrain from upgrading our estimates at this stage but firmly believe that the balance of risks lie to the upside. We also see SThree as well positioned to capitalise on structural trends within the recruitment space given its contract bias and geographic exposures," it said, as it reiterated its ‘buy’ stance and 425p target price.

At 0950 BST, the shares were up 3% to 340p.