REG - SThree plc - FY24 Q3 Trading Update

SThreeAnnouncement

24/09/2024 07:00

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RNS Number : 3194F  SThree plc  24 September 2024

24 September 2024

 

SThree plc

 

FY24 Q3 Trading Update

 

Contract extensions continue to underpin performance and full-year visibility

 

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 June 2024 to 31
August 2024.

 

 

Q3 Highlights

 

 ·             Group net fees down 8% YoY((1)) against the continuing backdrop of challenging
               market conditions, with Contract down 8%, representing 84% of net fees.
 ·             Contractor order book((2)) down 6% YoY to £167 million, representing
               sector-leading visibility (c.4 months of net fees).
 ·             Robust balance sheet with net cash of £45 million at 31 August 2024 (31
               August 2023: £83 million), reflective of the timing of certain client
               payments, with net cash expected to return towards normalised levels over the
               coming months.
 ·             Technology Improvement Programme remains on track, with the US and UK live and
               the deployment in Germany progressing as anticipated.
 ·             Performance for FY24 currently expected to be in line with market
               expectations((3)).

 

Timo Lehne, Chief Executive, commented:

 

"Despite the challenging conditions in the market, which have extended beyond
our industry's expectations, our strategic focus on Contract continues to
underpin the Group's competitive positioning. The Contract order book, down
6%, reflects protracted soft new placement activity partially offset by
ongoing strong Contract extensions.

 

Supported by a robust financial position, we continue to invest for the
future, with the phased implementation of our Technology Improvement Programme
being a core element. This is progressing to plan, providing a clear pathway
to significant operational enhancements over the mid-to-long term and enabling
us to lead the way in our industry.

 

We are ideally positioned at the heart of global STEM secular trends, and we
have the right platform for when the market recovers to enable the delivery of
long-term sustainable growth."

 

Business performance highlights

 

Against tough market conditions Group net fees were down 8% YoY reflecting the
ongoing softness in new business across Contract and Permanent, partially
offset by strong Contract extensions.

 

Technology, our largest skill vertical, delivered a sequential improvement in
performance, down 7% YoY. Engineering was also down 7% against a record prior
year performance, while Life Sciences declined 14% YoY as global activity in
that sector remains subdued.

 

Regionally, the Group delivered strong net fee growth in the Middle East and
Asia, underpinned by an impressive performance in Japan across all our main
skill verticals. Within the Group's three largest markets, which now represent
72% of net fees, Germany delivered a sequential improvement benefitting from
the lower rate of decline in demand for Technology skills. Our USA performance
reflected declines in Life Sciences and Technology, whilst the Netherlands saw
lower levels of demand for Engineering and Technology skills versus record
levels in the prior year.

 

The Group remains well placed to respond when market conditions improve, with
Group period-end headcount broadly unchanged from the end of the last
financial year. The Group continues to maintain a robust balance sheet with
net cash of £45 million at 31 August 2024, reflective of the timing of
certain client payments, with net cash expected to return towards normalised
levels over the coming months.

 

 

 

 

 

 

                                  Q3       Q3         Q3 2024       Q2 2024       Q1 2024
 Net fees                         2024     2023       YoY ((1))     YoY ((1))     YoY ((1))
 Contract                         £78.1m   £86.2m     -8%           -6%           -2%
 Permanent                        £14.6m   £16.8m     -9%           -15%          -21%
 GROUP                            £92.7m   £103.0m    -8%           -8%           -6%

 Regions
 DACH ((4))                       £33.4m   £36.6m     -8%           -10%          -13%
 Netherlands (incl. Spain) ((5))  £19.0m   £21.5m     -10%          +5%           +8%
 Rest of Europe ((6))             £15.3m   £17.8m     -13%          -10%          -10%
 USA                              £20.1m   £22.6m     -10%          -15%          -10%
 Middle East & Asia ((7))         £4.9m    £4.5m      +20%          +1%           +20%
 GROUP                            £92.7m   £103.0m    -8%           -8%           -6%

 Top five countries
 Germany                          £29.6m   £32.2m     -7%           -11%          -14%
 Netherlands                      £16.9m   £20.1m     -15%          -             +6%
 UK                               £9.6m    £11.6m     -17%          -11%          -7%
 USA                              £20.1m   £22.6m     -10%          -15%          -10%
 Japan                            £3.2m    £2.1m      +60%          +16%          +41%
 ROW ((8))                        £13.3m   £14.3m     -6%           -2%           -4%
 Group                            £92.7m   £103.0m    -8%           -8%           -6%

 Service mix                      Q3 2024   Q3 2023
 Contract                         84%      84%
 Permanent                        16%      16%

 Skills mix                       Q3 2024  Q3 2023
 Technology                       49%      48%
 Life Sciences                    16%      17%
 Engineering                      28%      27%
 Other                            7%       7%

 

 

((1)) All YoY growth rates 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)) Current consensus PBT expectation is £69.4m for FY24. Source: SThree
compiled consensus.

((4)) DACH - Germany, Austria and Switzerland.

((5)) Netherlands (incl. Spain) - Netherlands and Spain, which is managed from
the Netherlands.

((6)) Rest of Europe - UK, Belgium, France.

((7)) Middle East & Asia - Japan and UAE.

((8)) 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 Q3 Trading Update. If you would like to register for the
conference call, please contact SThree@almastrategic.com.

 

Forward looking dates

 

The Group will issue its trading update for the year ending 30 November 2024
on 17 December 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 5,400 clients (with whom we worked
in the Q3 year to date period) across 11 countries. Our Group's c.2,600 staff
cover the Technology, Life Sciences and Engineering sectors. SThree is part of
the Industrial Services sector. We are listed on 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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