SThree’s H1 update has underlined, in equal measure, both the extent of the Coronavirus impacts but also the resilience of the SThree business model. In headline terms net fees were solid in Q1 and came under material pressure in Q2. However, our sense is that the 12% YoY decline in Q2 was better than the market would have been expecting. Impacts varied considerably across the group, which also underlines the geographical breadth of the business and the localised effects within the STEM niches that SThree serves. It is clear SThree has responded to the pandemic in a nuanced and differentiated fashion. Despite headcount reductions (-5% Q2 vs Q1) we do not see a “slash and burn” approach that has typified others. Heading into the crisis, SThree had been in strategic growth and investment mode in response to structural drivers (STEM and flexible working) that remain very much in place. Management response to the crisis has been to protect the business whilst not sacrificing these growth opportunities. The resilience of the business model can also seen through the growing strength of the balance sheet as a result of specific management action but also the natural working capital release of the contract business model. Net cash of £31m and £136m of total available liquidity positions SThree securely for the second half.
24 Jun 2020
Down, but by no means out
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Down, but by no means out
SThree plc (STEM:LON) | 426 12.8 0.7% | Mkt Cap: 574.9m
- Published:
24 Jun 2020 -
Author:
Iain Daly -
Pages:
8
SThree’s H1 update has underlined, in equal measure, both the extent of the Coronavirus impacts but also the resilience of the SThree business model. In headline terms net fees were solid in Q1 and came under material pressure in Q2. However, our sense is that the 12% YoY decline in Q2 was better than the market would have been expecting. Impacts varied considerably across the group, which also underlines the geographical breadth of the business and the localised effects within the STEM niches that SThree serves. It is clear SThree has responded to the pandemic in a nuanced and differentiated fashion. Despite headcount reductions (-5% Q2 vs Q1) we do not see a “slash and burn” approach that has typified others. Heading into the crisis, SThree had been in strategic growth and investment mode in response to structural drivers (STEM and flexible working) that remain very much in place. Management response to the crisis has been to protect the business whilst not sacrificing these growth opportunities. The resilience of the business model can also seen through the growing strength of the balance sheet as a result of specific management action but also the natural working capital release of the contract business model. Net cash of £31m and £136m of total available liquidity positions SThree securely for the second half.