REG-SThree SThree: FY23 Q1 Trading Update
21/03/2023 07:15
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SThree (STEM)
SThree: FY23 Q1 Trading Update
21-March-2023 / 07:00 GMT/BST
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21 March 2023
SThree plc
FY23 Q1 Trading Update
Net fee growth driven by our Contract business
SThree plc ("SThree" or the "Group"), the only global pure-play specialist
staffing business focused on roles in Science, Technology, Engineering and
Mathematics (‘STEM’), today issues a trading update covering the period 1
December 2022 to 28 February 2023.
Highlights
• Group net fees for the quarter up 4% YoY(1), in line with
expectations.
• Contract net fees up 8% YoY with growth across all regions, with
Contract now representing 81% of Group net fees (Q1 2022: 77%, Q4
2022: 78%).
• Permanent net fees down 12% YoY, reflecting market conditions,
performance in USA and Life Sciences, and the planned transition from
Permanent to Contract in several markets.
• In our largest three markets, which represent 73% of net fees, Germany
and the Netherlands grew 7% and 4% respectively, while USA was down
6%.
• Technology up 8% and Engineering up 19%, while Life Sciences was down
15%.
• Contractor order book (2) up 5% YoY (Q4 2022: up 19% YoY).
• Robust balance sheet, with £64 million net cash as at 28 February 2023
(28 February 2022: £41 million, 30 November 2022: £65 million).
Timo Lehne, Chief Executive, commented:
“The Group has delivered a robust net fee performance in the first quarter
of FY23 with fees up 4% YoY, in line with expectations, and supported by
the strength of our well-established strategy, focused on STEM and
flexible talent. The macro-economic environment remains uncertain, and we
continue to see varied effects across our markets impacting new
placements, offset by strong Contract extensions. Our Contractor Order
Book underpins our near term visibility and continues to be a source of
strength for the business, with Contract now representing 81% of Group net
fees.
We have continued to make progress against our clear strategy which is
centred on an analytical and fact-based approach of knowing where to play
and playing where we can win. Our targeted investment in talent and
digital infrastructure is progressing as planned, positioning the Group to
scale with sustainable margins, in line with our 2024 ambitions.
Our long-term opportunity is unchanged, underpinned by structural
megatrends which drive the acute need for scarce STEM talent. We are
closely monitoring lead indicators across our markets as we navigate
challenging macro conditions. Supported by a resilient business model and
robust financial position, we remain well positioned to source and place
the best STEM talent the world needs.”
Reporting structure change
SThree has changed its reporting structure, as shown in the tables below.
Going forward, SThree will apply the new groupings of DACH, Netherlands
(including Spain, which is managed from the Netherlands), Rest of Europe,
USA and Middle East & Asia, as well as continuing to present the net fees
of its five key markets: Germany, Netherlands, USA, UK and Japan. A table
with the historical reporting structure is provided in the appendix.
Q1 Q1 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1
2022
Net fees 2023 2022 YoY (1) YoY (1) YoY (1) YoY (1) YoY
(1)
Contract £82.7m £72.3m +8% +14% +21% +29% +32%
Permanent £19.9m £21.5m -12% -5% +10% +5% +18%
GROUP £102.6m £93.8m +4% +9% +19% +23% +29%
Regions
DACH (3) £36.8m £32.6m +8% +5% +16% +23% +26%
Netherlands (incl. £18.7m £16.9m +6% +21% +36% +38% +45%
Spain) (4)
Rest of Europe (5) £17.5m £16.5m +4% +9% +16% +17% +17%
USA £24.3m £23.5m -6% +3% +9% +16% +27%
Middle East & Asia £5.3m £4.3m +19% +31% +45% +31% +54%
(6)
GROUP £102.6m £93.8m +4% +9% +19% +23% +29%
Top five countries
Germany £32.7m £29.3m +7% +3% +13% +20% +24%
Netherlands £17.9m £16.3m +4% +21% +36% +38% +45%
UK £10.8m £10.2m +6% +14% +25% +28% +29%
USA £24.3m £23.5m -6% +3% +9% +16% +27%
Japan £2.1m £2.0m +7% +55% +44% +25% +78%
ROW (7) £14.8m £12.5m +12% +12% +23% +21% +19%
Group £102.6m £93.8m +4% +9% +19% +23% +29%
Service mix Q1 2023 Q1 2022
Contract 81% 77%
Permanent 19% 23%
Skills mix Q1 2023 Q1 2022
Technology 49% 47%
Life Sciences 19% 23%
Engineering 24% 21%
Other 8% 9%
Business performance highlights
The Group delivered a robust net fee performance in the quarter, up 4%
YoY. Overall, our Contract business was up 8% and Permanent business was
down 12%, reflecting the USA and Life Sciences performance, and the
strategic transition from Permanent to Contract in several markets.
Contract, our strategic focus, now represents 81% of net fees.
Contract
• 8th consecutive quarter of growth with net fees up 8% YoY.
◦ Growth across all regions: DACH was up 6% YoY, Netherlands up 9%, Rest
of Europe up 11%, USA up 4% and Middle East & Asia up 70%.
◦ Strong growth in Technology, up 9% YoY, and Engineering, up 23%, with
Life Sciences down 8% reflecting softer market conditions against a
strong comparator period in Q1 FY22.
• The contractor order book was up 5% YoY (Q4 2022: up 19%).
Permanent
• Permanent net fees for the first quarter were down 12% YoY, reflecting
market conditions, recent office restructures and the strategic
acceleration of our transition from Permanent to Contract in several
markets.
◦ Robust growth in DACH up 11%. All other regions saw net fees
decline in the first quarter.
◦ Technology was up 5% with Engineering down 6% and Life Sciences
down 39%, reflecting a combination of the softer market
conditions against a strong comparator period, together with the
transition towards Contract.
Headcount and productivity
• Group period-end headcount was down 4% vs Q4 2022, though this
movement included reductions related to the restructure of the
Singapore, Hong Kong and Ireland businesses. On a like-for-like
basis, Group period-end headcount was down 2% vs Q4 2022.
• Group average headcount in the quarter was up 9% YoY.
• We continue to invest in line with our previously stated strategy of
focusing on specific niches within sectors and markets where we can
gain valuable market share. While we are managing costs tightly, a
highly disciplined and targeted investment in talent acquisition
within Contract remains a priority for the business, maintaining the
ability to take advantage when trading conditions improve.
• As expected, and as previously communicated, we have seen some
normalisation of productivity as new hires come on board and net fee
growth rates normalise, with Q1 productivity down 5% YoY.
Regional highlights
DACH saw net fees grow 8% YoY
• Growth in Contract and Permanent up 6% and 11% YoY, respectively.
• Germany, our largest country in the region, delivered net fee growth
of 7% driven by:
◦ Technology up 11% due to demand for roles within Cyber Security
and Software Development.
◦ Engineering up 21%, with higher demand for Construction roles.
Netherlands region saw net fees grow 6% YoY
• The Netherlands, which represents 95% of net fees for the region, saw
net fee growth of 4% YoY driven by:
◦ Technology up 6% with increased demand for Project Managers, ERP
Consultants, Data Engineers and Data Science roles.
◦ Engineering up 2% due to demand for Process Engineers, Electrical
Engineers and Health & Safety Advisors.
Rest of Europe saw net fees grow 4% YoY.
• Contract, which represents 94% of net fees for the region, grew 11%
YoY, which more than offset the 45% decrease in Permanent net fees,
due to both market conditions and the transition towards Contract,
particularly in the UK.
• The UK, our largest country in the region, saw net fee growth of 6%,
driven by:
◦ Technology up 7%, as demand increased for Software Engineers and
roles within Digital Transformation.
USA saw net fees decline 6% YoY
• Contract business, which now represents 85% of net fees, was up 4% YoY
driven by:
◦ Engineering up 29%, with increased demand for roles within
Project Management, Electrical and Mechanical Engineering.
• Permanent, which represents 15% of net fees, declined 40% YoY driven
by Life Sciences as we face very strong prior year comparatives in
addition to the accelerated transition towards Contract.
Middle East and Asia saw net fees grow 19% YoY.
• Japan, which represents 39% of the region, was up 7% YoY driven by
Life Sciences due to increased demand for roles within Pharmaceuticals
& Biotechnology.
• Strong performance in UAE with net fees up 67% driven by Engineering.
Balance sheet
SThree remains in a robust financial position, with net cash at 28
February 2023 of £64m (28 February 2022: net cash £41m, 30 November 2022:
net cash £65m). Total accessible liquidity of £119m comprises £64m net
cash, a £50m revolving credit facility (‘RCF’), which runs until 2025
(with options to extend it until 2027), and a £5m overdraft facility (RCF
and overdraft fully undrawn). In addition, SThree has a £20m accordion
facility as well as a substantial working capital position, reflecting net
cash due to the Group for placements already undertaken.
Analyst conference call
SThree is hosting a conference call for analysts and investors today at
8.30am to discuss the FY23 Q1 trading update. If you would like to
register for the conference call, please contact SThree@almapr.co.uk.
The Group will issue its trading update for the six months ending 31 May
2023 on 20 June 2023.
(1) All YoY growth rates in this announcement are expressed at constant
currency.
(2) The contractor order book represents value of net fees until
contractual end dates, assuming all contractual hours are worked.
(3) DACH – Germany, Austria and Switzerland.
(4) Netherlands (incl. Spain) – Netherlands and Spain, which is managed
from the Netherlands.
(5) Rest of Europe – UK, Belgium, France, Luxembourg and Ireland.
(6) Middle East & Asia – Japan, UAE & Singapore.
(7) ROW – All other countries we operate in.
- Ends -
The information contained within this announcement is deemed by the
Company to constitute inside information under the Market Abuse Regulation
(Regulation (EU) No.596/2014) as it forms part of UK Domestic Law by
virtue of the European Union (Withdrawal) Act 2018.
Enquiries:
SThree plc
Timo Lehne, CEO
Andrew Beach, CFO
via Alma
+44 20 3405 0205
Alma PR
Hilary Buchanan
Sam Modlin SThree@almapr.co.uk
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 8,200 clients across 14
countries. Our Group’s c.3,000 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.
Appendix
Q1 Q1 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022
Net fees 2023 2022 YoY (1) YoY (1) YoY (1) YoY (1) YoY (1)
Contract £82.7m £72.3m +8% +14% +21% +29% +32%
Permanent £19.9m £21.5m -12% -5% +10% +5% +18%
GROUP £102.6m £93.8m +4% +9% +19% +23% +29%
Management
Structure
DACH £36.8m £32.6m +8% +5% +16% +23% +26%
EMEA excl. DACH £38.8m £34.9m +8% +15% +26% +26% +29%
USA £24.3m £23.5m -6% +3% +9% +16% +27%
APAC £2.7m £2.8m -4% +36% +40% +32% +71%
GROUP £102.6m £93.8m +4% +9% +19% +23% +29%
Top five
countries
Germany £32.7m £29.3m +7% +3% +13% +20% +24%
Netherlands £17.9m £16.3m +4% +21% +36% +38% +45%
UK £10.8m £10.2m +6% +14% +25% +28% +29%
USA £24.3m £23.5m -6% +3% +9% +16% +27%
Japan £2.1m £2.0m +7% +55% +44% +25% +78%
ROW £14.8m £12.5m +12% +12% +23% +21% +19%
Group £102.6m £93.8m +4% +9% +19% +23% +29%
Service mix Q1 2023 Q1 2022
Contract 81% 77%
Permanent 19% 23%
Skills mix Q1 2023 Q1 2022
Technology 49% 47%
Life Sciences 19% 23%
Engineering 24% 21%
Other 8% 9%
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Dissemination of a Regulatory Announcement that contains inside
information in accordance with the Market Abuse Regulation (MAR),
transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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ISIN: GB00B0KM9T71
Category Code: QRF
TIDM: STEM
LEI Code: 2138003NEBX5VRP3EX50
Sequence No.: 231212
EQS News ID: 1587317
End of Announcement EQS News Service
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