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
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Group net fees down 8%
YoY(1) against the continuing backdrop of challenging
market conditions, with Contract down 8%, representing 84% of net
fees.
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Contractor order
book(2) down 6% YoY to £167
million, representing sector-leading visibility (c.4 months of net
fees).
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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.
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Technology Improvement Programme
remains on track, with the US and UK live
and the deployment in Germany progressing as
anticipated.
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Performance for FY24 currently
expected to be in line with market
expectations(3).
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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.
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Q3
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Q3
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Q3 2024
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Q2 2024
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Q1 2024
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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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Contract
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£78.1m
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£86.2m
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-8%
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-6%
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-2%
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Permanent
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£14.6m
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£16.8m
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-9%
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-15%
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-21%
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GROUP
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£92.7m
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£103.0m
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-8%
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-8%
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-6%
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Regions
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DACH (4)
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£33.4m
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£36.6m
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-8%
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-10%
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-13%
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Netherlands (incl. Spain)
(5)
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£19.0m
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£21.5m
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-10%
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+5%
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+8%
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Rest of Europe (6)
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£15.3m
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£17.8m
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-13%
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-10%
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-10%
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USA
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£20.1m
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£22.6m
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-10%
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-15%
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-10%
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Middle East & Asia (7)
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£4.9m
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£4.5m
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+20%
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+1%
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+20%
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GROUP
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£92.7m
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£103.0m
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-8%
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-8%
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-6%
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Top
five countries
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Germany
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£29.6m
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£32.2m
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-7%
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-11%
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-14%
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Netherlands
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£16.9m
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£20.1m
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-15%
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-
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+6%
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UK
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£9.6m
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£11.6m
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-17%
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-11%
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-7%
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USA
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£20.1m
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£22.6m
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-10%
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-15%
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-10%
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Japan
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£3.2m
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£2.1m
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+60%
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+16%
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+41%
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ROW (8)
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£13.3m
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£14.3m
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-6%
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-2%
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-4%
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Group
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£92.7m
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£103.0m
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-8%
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-8%
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-6%
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Service mix
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Q3 2024
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Q3
2023
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Contract
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84%
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84%
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Permanent
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16%
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16%
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Skills mix
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Q3 2024
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Q3
2023
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Technology
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49%
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48%
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Life Sciences
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16%
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17%
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Engineering
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28%
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27%
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Other
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7%
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7%
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(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.
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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
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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