REG - SThree plc - FY24 Q1 Trading Update

SThreeAnnouncement

19/03/2024 07:00

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RNS Number : 3060H  SThree plc  19 March 2024

 

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

 

 ·             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%.
 ·             Contractor order book((3)) down 1% YoY to £184 million, representing
               sector-leading visibility with the equivalent of c.4 months of net fees.
 ·             Strong balance sheet with net cash of £97 million at 29 February 2024 (28
               February 2023: £64 million).
 ·             Technology Improvement Programme remains on budget and on plan, with half of
               our cities in Germany initiated.
 ·             Performance for FY24 currently expected to be in line with market
               expectations((4)).

 

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.

 

 

 

 

                                  Q1       Q1            Q1 2024              Q4 2023           Q3 2023             Q2 2023           Q1 2023
 Net fees                         2024     2023          YoY ((1))            YoY ((1))         YoY ((1))           YoY ((1))         YoY ((1))
 Contract                         £78.9m   £82.7m        -2%                  -2%               -                   -1%               +8%
 Permanent                        £14.8m   £19.9m        -21%                 -17%              -31%                -25%              -12%
 GROUP                            £93.7m   £102.6m       -6%                  -5%               -7%                 -7%               +4%

 Regions
 DACH ((6))                       £31.5m   £36.8m        -13%                 -5%               -6%                 -7%               +8%
 Netherlands (incl. Spain) ((7))  £19.8m   £18.7m        +8%                  +5%               +9%                 +4%               +6%
 Rest of Europe ((8))             £15.6m   £17.5m        -10%                 -8%               -5%                 -7%               +4%
 USA                              £21.1m   £24.3m        -10%                 -14%              -19%                -15%              -6%
 Middle East & Asia ((9))         £5.7m    £5.3m         +20%                 +16%              -14%                -5%               +19%
 GROUP                            £93.7m   £102.6m       -6%                  -5%               -7%                 -7%               +4%

 Top five countries
 Germany                          £27.6m   £32.7m        -14%                 -6%               -6%                 -8%               +7%
 Netherlands                      £18.4m   £17.9m        +6%                  +2%               +5%                 +1%               +4%
 UK                               £10.0m   £10.8m        -7%                  -8%               -4%                 -6%               +6%
 USA                              £21.1m   £24.3m        -10%                 -14%              -19%                -15%              -6%
 Japan                            £2.5m    £2.1m         +41%                 +24%              -4%                 -2%               +7%
 ROW ((10))                       £14.1m   £14.8m        -4%                  +4%               -5%                 -2%               +12%
 Group                            £93.7m   £102.6m       -6%                  -5%               -7%                 -7%               +4%

 Service mix                      Q1 2024  Q1 2023
 Contract                         84%      81%
 Permanent                         16%      19%

 Skills mix                       Q1 2024  Q1 2023
 Technology                       47%      49%
 Life Sciences                    16%      19%
 Engineering                      29%      24%
 Other                            8%       8%

 

 

((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.

 

 Enquiries:

 SThree plc
 Timo Lehne, CEO                            via Alma

 Andrew Beach, CFO

 Keren Oser, Investor Relations Director

 Alma Strategic Communications             +44 20 3405 0205

 Rebecca Sanders-Hewett                    SThree@almastrategic.com

 Hilary Buchanan

 Sam Modlin

 Will Ellis Hancock

 

 

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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