SThree H1 profit, revenue fall as challenging market conditions persist

(Sharecast News) - Recruiter SThree reported a fall in first-half profit and revenue on Tuesday amid "persistent" challenging market conditions, but backed its expectations for the year. In the six months to the end of May, pre-tax profit declined 74% from the same period a year earlier to £10.1m, while revenue was down 15% to £648.8m.

Net fees dropped 16% to £159.1m and SThree said there had been a modest sequential improvement quarter-on-quarter during the second quarter, "against the backdrop of persistent challenging market conditions".

Net fees in the contract segment, which represents 84% of group net fees, were down 14% as continued softness in new business activity was partially offset by strong contract extensions.

Permanent net fees declined 13% due to tough market conditions across most of the company's regions. However, SThree said there was a sequential improvement compared to FY24 driven by growth in the US and Japan.

The recruiter said new business remains soft but it is seeing "pockets" of improving momentum in certain segments and markets, including in US and Japan where initiatives to improve market positioning are gaining traction.

The company said its performance for FY25 is expected to be in line with previously-announced guidance of £25m in pre-tax profit.

Chief executive Timo Lehne said: "The group delivered a stable performance in the first half of the year against a persistently challenging market environment. Whilst overall new business activity remains soft, the continued necessity for critical STEM skills is evidenced by our robust Contract extensions and we have seen some improved momentum within our focused markets and skills mix, such as the US and engineering.

"We have made significant progress in preparing our business for when market conditions improve and to align with structural opportunities. We now have over 80% of our business transacting through our end-to-end, integrated technology infrastructure as a result of the TIP rollout, helping to drive operational efficiencies and enhancing our ability to scale.

"Across the US and Germany, we are already seeing reductions in time to first interview and productivity improvements in our most junior consultants, two key metrics when we set out on this journey. In just the last six months, we've launched 60 new product enhancements and continue to develop five key features powered by AI. This shows that we are now able to innovate at pace, with the foundations to unlock rich data insights and layer in new, future-ready functionality."