SThree forecasts profit beat, quarterly performance "encouraging"

SThree PLC on Tuesday said it expects full-year pretax profit ahead of previous guidance, although it noted that this is mainly due to "one-off benefits".

"Our Q3 performance showed continued sequential improvement, with six of our 11 Contract markets delivering new business growth and supporting a 5% increase in our contractor order book," commented Chief Executive Timo Lehne. "As Contract revenue is recognised over the life of each contract, it strengthens visibility over future net fees and gives us greater confidence in the trajectory of performance.

"We are seeing encouraging signs of stabilisation, supported by growth in the USA and moderating declines in several markets."

SThree expects pretax profit for the full year to total "at least" £12 million, up from its previously announced guidance of approximately £10 million.

"This outperformance primarily reflects a focus on working capital efficiencies and other one-off benefits, which are not expected to recur," it cautioned.

The firm noted that group net fees for its third quarter, which ended on August 31, decreased 2% year-on-year to £79.2 million from £81.5 million. This followed an 8% fall in the first quarter and a 6% one in the second. Contract net fees decreased 1% to £66.9 million, while Permanent's were down by 8% at £12.3 million.

The London-based science, technology, engineering and mathematics-focused staffing company also noted its "robust balance sheet". Its net cash totalled £36 million at August 31, down from £42 million one year prior. Additionally, SThree said its up to £20 million buyback programme has reached £10.5 million as of Monday, since its launch in February.

SThree's "cost optimisation programme" for the year is "on track," it added, although the savings are weighted towards the second half.

"While market conditions remain mixed, improving trends across our Contract business and growth in our order book demonstrate that our strategy is delivering.

"The investments we have made in technology and data leave us well positioned to capitalise on future opportunities...This, combined with continued productivity gains and ongoing execution of our cost optimisation programme, reinforces our confidence in our future growth prospects and in delivering FY26 profit before tax ahead of previous guidance," CEO Lehne said.

SThree shares opened up 3.1% on Tuesday in London, but were flat at 304.50 pence at around midday.

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