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16 Mar 2020
First Take: SThree - Q1/20 update
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First Take: SThree - Q1/20 update
SThree plc (STEM:LON) | 438 -2.2 (-0.1%) | Mkt Cap: 591.4m
- Published:
16 Mar 2020 -
Author:
Tom Callan -
Pages:
4
Q1 in-line with expectations
Q1/20 trading update (covering Dec-Feb). Group NFI flat LFL and in-line with management expectations. DACH (the strongest performer across the Group) fees grew c.9% LFL (Germany +7% LFL, which represents c.92% of the division and is driven by strong growth in Life Sciences and Tech). EMEA excl DACH -6% LFL, driven mainly by a poor performance in the UK (-8% LFL), mainly as a consequence of the soon-to-be-implemented private-sector IR35 rules (as per last week’s Budget) and Brexit-induced market volatility in December. The Netherlands (the largest constituent of EMEA) saw LFL fees +3%. The US was below market expectations (flat YoY), driven by a decline in Banking & Finance (net fees -38% LFL) and a below expectation performance in Technology and Engineering. APAC, as expected, was disappointing – LFL fees -15%, driven mainly by the impact of COVID-19 in Jan-20 and the Australian Wildfires). Net cash c.£9m as at 29th Feb.
TP, recommendation and forecasts under review
As seen across the wider peer group, we believe it is likely that consensus will move materially lower today in light of the recent COVID-19 outbreak and the confirmed roll-out of IR35 in the UK private sector. We therefore place our TP, forecasts and recommendation under review pending today’s results call (at 08:30).