Recruiter full-year results will be in-line, but confirmed profits are down
Companies: SThree plc
International recruitment specialist SThree gave a mixed trading update this morning, saying gross profit would be down 2% year-on-year, but confirming that the group expected full year results to be in-line with expectations.
Stockbroker Liberum welcomed the announcement saying that it showed "Signs of encouragement" during a difficult quarter.
The company's share price, which collapsed after the EU Referendum due to the uncertainty surrounding London's Banking and Finance sectors, opened flat at -0.5%.
Today's results confirm that the group has suffered from a slowdown in those markets, with profit from UK operations down 9%. This is primarily caused by an EU Referendum-induced slow down in the Banking and Finance sectors. US gross profit is also down 10% vs 2015, despite a 14% increase vs Q2:
"...reflecting tough trading conditions in Energy and Banking & Finance and strong prior year comparatives"
There was some good news for the AIM-listed company, who saw robust growth of 8% and 9% in its ICT and Engineering divisions, and increased its strength in foreign markets which generated 76% of its gross profit, up 4% on the previous year, benefitting from positive currency translation caused by the Brexit sterling slump.
Commenting on today's announcement, SThree's CEO Gary Elden said that mixed trading conditions that were identified in H1 continued into Q3:
"Our Contract business continued to perform well overall, with GP increasing by 6%* year on year. Continental Europe once again grew strongly, underpinned by a very pleasing performance in DACH, where GP was ahead by 17%* year on year. However, the uncertainty created by the EU Referendum impacted our UK business, and our USA growth rate reflects the ongoing weakness in the Energy and Banking & Finance markets."
The company is now heading into its most significant quarter of the year, and full year expectations remain unchanged.