19 March 2024
SThree plc
FY24 Q1 Trading Update
Resilient performance
underpinned by continued strong contract extensions
SThree plc ("SThree" or the
"Group"), the only global specialist talent partner focused on
roles in Science, Technology, Engineering and Mathematics ('STEM'),
today issues a trading update covering the period 1 December 2023
to 29 February 2024.
Highlights
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Group net fees for FY24 Q1 down 6%
YoY(1) against a record prior year
performance(2) and the ongoing challenging backdrop,
with Contract (now 84% of net fees) down 2%.
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Contractor order
book(3) down 1% YoY to £184
million, representing sector-leading visibility with the equivalent
of c.4 months of net fees.
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Strong balance sheet with net cash
of £97 million at 29 February 2024 (28 February 2023: £64
million).
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Technology Improvement Programme
remains on budget and on plan, with half of our cities in Germany
initiated.
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Performance for FY24 currently
expected to be in line with market
expectations(4).
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Timo Lehne, Chief Executive,
commented:
"Once again, we have delivered a
good performance against a strong comparative and within a market
environment that remains difficult from a new business perspective.
Whilst the sentiment we are reporting is much the same as the prior
period, the strength of our Contract extensions continues to be a
particular highlight, demonstrating our
clients' need to retain critical STEM skills and flexible
talent.
We continue to make good progress
with our Technology Improvement Programme, with our new end-to-end
integrated platform now fully deployed in the US and initiated in
Germany, providing our teams with the digital tools which will be
key to driving both scale and higher margins over the mid-to-long
term.
Whilst we look forward to the easing
of the macro environment, our strategic focus, exposure to
long-term megatrends, and progress to date delivering operational
enhancements provide us with a resilient and financially robust
foundation with the capacity and improved capabilities to deliver
our ambitions and future growth."
Business performance highlights
The Group delivered a good net fee
performance in the quarter against the backdrop of a record prior
year performance and tough market conditions, with net fees down 6%
YoY driven by continued softness in new business across Contract
and Permanent, which was largely offset by strong Contract
extensions.
Across both Contract and Permanent,
the Group saw continued strong demand for Engineering roles, driven
primarily by the Energy sector with renewables the fastest growing
segment, while demand for Life Sciences and Technology roles
continues to reflect ongoing market conditions and record
comparatives for Technology.
Regionally, the Group saw strong
growth in the Middle East and Asia, driven by exceptional
performance in Japan across all three of our main skill verticals.
Within the Group's largest three markets, which represent 72% of
net fees, the Netherlands achieved solid YoY growth due to strong
Engineering and resilient Technology performances, while the USA
was down, driven by declines in Life Sciences and Technology
partially offset by an improving Engineering performance, and
Germany was also down in spite of Engineering and Life Sciences
growth, as the decline in Technology outweighed this
performance.
As the Group remains focused on
being positioned to respond as the market changes, average
headcount for the quarter was down 12% YoY, whilst Group period-end
headcount was flat versus FY23 Q4.
Productivity(5)
remains elevated above pre-pandemic levels
achieved in FY19.
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Q1
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Q1
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Q1 2024
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Q4 2023
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Q3 2023
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Q2 2023
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Q1 2023
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Net
fees
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2024
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2023
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YoY (1)
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YoY (1)
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YoY (1)
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YoY (1)
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YoY (1)
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Contract
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£78.9m
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£82.7m
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-2%
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-2%
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-
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-1%
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+8%
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Permanent
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£14.8m
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£19.9m
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-21%
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-17%
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-31%
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-25%
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-12%
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GROUP
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£93.7m
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£102.6m
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-6%
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-5%
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-7%
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-7%
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+4%
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Regions
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DACH (6)
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£31.5m
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£36.8m
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-13%
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-5%
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-6%
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-7%
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+8%
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Netherlands (incl. Spain)
(7)
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£19.8m
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£18.7m
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+8%
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+5%
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+9%
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+4%
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+6%
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Rest of Europe (8)
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£15.6m
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£17.5m
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-10%
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-8%
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-5%
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-7%
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+4%
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USA
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£21.1m
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£24.3m
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-10%
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-14%
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-19%
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-15%
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-6%
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Middle East & Asia (9)
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£5.7m
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£5.3m
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+20%
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+16%
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-14%
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-5%
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+19%
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GROUP
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£93.7m
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£102.6m
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-6%
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-5%
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-7%
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-7%
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+4%
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Top
five countries
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Germany
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£27.6m
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£32.7m
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-14%
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-6%
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-6%
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-8%
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+7%
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Netherlands
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£18.4m
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£17.9m
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+6%
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+2%
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+5%
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+1%
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+4%
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UK
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£10.0m
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£10.8m
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-7%
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-8%
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-4%
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-6%
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+6%
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USA
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£21.1m
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£24.3m
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-10%
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-14%
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-19%
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-15%
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-6%
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Japan
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£2.5m
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£2.1m
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+41%
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+24%
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-4%
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-2%
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+7%
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ROW (10)
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£14.1m
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£14.8m
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-4%
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+4%
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-5%
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-2%
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+12%
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Group
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£93.7m
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£102.6m
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-6%
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-5%
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-7%
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-7%
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+4%
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Service mix
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Q1 2024
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Q1 2023
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Contract
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84%
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81%
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Permanent
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16%
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19%
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Skills mix
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Q1 2024
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Q1 2023
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Technology
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47%
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49%
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Life Sciences
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16%
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19%
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Engineering
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29%
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24%
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Other
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8%
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8%
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(1) All YoY growth rates expressed at constant
currency.
(2) FY23 Q1 Group Net Fees up 4% YoY to £102.6m.
(3) The contractor order book represents value of net fees until
contractual end dates, assuming all contractual hours are
worked.
(4) Current consensus PBT expectation is £71.9m for FY24. Source:
SThree compiled consensus.
(5) Productivity calculated as net fees divided by total average
headcount.
(6) DACH - Germany, Austria and Switzerland.
(7) Netherlands (incl. Spain) - Netherlands and Spain, which is
managed from the Netherlands.
(8) Rest of Europe - UK, Belgium, France, Luxembourg and
Ireland.
(9) Middle East & Asia - Japan, UAE &
Singapore.
(10) ROW - All other countries we operate in.
Analyst conference call
SThree is hosting a conference call
for analysts and investors today at 8.30am to discuss the
FY24 Q1 Trading Update. If you would like to register for
the conference call, please contact SThree@almastrategic.com.
The Group
will issue its trading update for the six months ended 31 May 2024
on 18 June 2024.
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Enquiries:
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SThree plc
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Timo Lehne, CEO
Andrew Beach, CFO
Keren Oser, Investor Relations
Director
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via Alma
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Alma Strategic Communications
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+44
20 3405 0205
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Rebecca Sanders-Hewett
Hilary Buchanan
Sam Modlin
Will Ellis Hancock
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SThree@almastrategic.com
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Notes to editors
SThree plc brings skilled people
together to build the future. We are the only global specialist
talent partner focused on roles in Science, Technology, Engineering
and Mathematics ('STEM'), providing
permanent and flexible contract talent to a diverse base of over
7,200 clients across 11 countries. Our Group's c.2,700 staff cover
the Technology, Life Sciences and Engineering sectors. SThree is
part of the Industrial Services sector. We are listed on the
Premium Segment of the London Stock Exchange's Main Market, trading
with ticker code STEM.
Important
notice
Certain statements in this announcement are forward looking
statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to differ materially from those expressed
or implied by those statements. Forward looking statements
regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the
future. Certain data from the announcement is sourced from
unaudited internal management information and is before any
exceptional items. Accordingly, undue reliance should not be placed
on forward looking statements.
- Ends
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