12 December 2024
SThree plc
Trading Update
FY24 performance in line,
challenging conditions persist
Intention to launch share buyback
programme of up to £20m
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 for the financial year ended 30
November 2024.
Full Year
Highlights
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Group net fees for the full year
down 9% YoY(1) against the backdrop of ongoing
challenging market conditions, with Contract down 7%, representing
84% of net fees.
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Contractor order
book(2) down 10% YoY to £161
million, whilst continuing to represent sector-leading visibility
(c.4 months of net fees).
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Robust balance sheet with net cash
of £70 million at 30 November 2024 (30 November 2023: £83
million).
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Technology Improvement Programme
(TIP) remains on track with deployment
across four of the Group's largest markets, and latest roll-out in
the Netherlands initiated this quarter. US and UK are live and the
deployments in Germany and Netherlands progressing as
anticipated.
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Performance for FY24 expected to be
in line with market expectations(3).
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Outlook
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Whilst the Group continues to expect
robust contract extensions, new business activity remained weak
throughout FY24 driven by the protracted challenging economic
conditions, impacting FY25 performance. The latter part of FY24 saw
increased political and macro-economic uncertainty, particularly in
Europe, further delaying decision making and the anticipated easing
of market conditions.
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The Board is now making the prudent
assumption that these challenges will persist throughout FY25,
impacting net fees.
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Following early efficiencies from
the TIP and insights into its full potential, we now have the
confidence to accelerate the realisation of further operational
efficiencies to reduce the financial implications of these
challenges which will drive in year net savings of
c.£6m.
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The Board now expects FY25 profit
before tax to be c.£25m which includes up to £7m of one-off costs
to deliver the additional operational efficiencies.
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The Board remains confident that the
Group's strategic focus on STEM and Contract, the completed rollout
of the TIP, alongside the actions being taken, will position the
Group for sustained profitable growth when markets
recover.
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Intention to launch a share buyback
programme
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SThree announces its intention
to launch a share buyback programme of up
to £20m, to be completed over the next six months.
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In light of SThree's cash generation
and strong balance sheet, the Board considers it prudent to launch
the buyback, in line with its stated capital allocation
policy.
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Following completion of the buyback
programme the Group expects to retain a net cash position
reflecting the overall capital needs of the business.
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Timo Lehne, Chief Executive,
commented:
"As has been widely reported
across our industry, the past year has been characterised by
protracted challenging market conditions which have impacted new
business activity. Nonetheless, we continued to see robust contract
extensions through the year which demonstrates the value our
customers place on the critical STEM roles we provide and the
skills on which they rely to power their organisations. It is our
specialism in STEM and Contract, combined with careful cost
management, that has delivered a resilient performance, with FY24
expected to be in line with market consensus.
"There is no doubt that the labour market is undergoing
changes driven by new technology and new ways of working. We
recognised these megatrends early which has informed both our
strategy to target niche specialisms where we see structural
growth, being STEM and Contract, but also our own approach to how
we pursue these opportunities. Our Technology Improvement Programme
is a core component of where we see our mid-to-long term
opportunity, and its phased implementation which continues to
progress to plan, underpinned by a robust financial position, takes
us closer to our digital-first vision.
"The nature of our business model has meant we have been able
to withstand the external pressures until now. However, the
anticipated easing of market conditions has not yet materialised,
with delayed decision making continuing to impact new placement
activity whilst Contract extensions remain robust. With this
dynamic expected to persist through next year, the Board has taken
a prudent view of FY25. We nonetheless remain confident that we
have the right strategy, an energised team, and a robust technology
platform which is becoming more powerful as we roll-out additional
functionality, leaving us well placed for when market conditions
improve."
Business performance highlights
In challenging market conditions
Group net fees were down 9% YoY reflecting the continued softness
in new business across Contract and Permanent, partially offset by
strong Contract extensions.
The Group's Engineering net fees for
the full year, were down 1% against a record prior year
performance. Technology and Life Sciences performance reflected the
tough market conditions throughout the year and declined 10% and
17% respectively.
Regionally, the Group delivered net
fee growth in the Middle East and Asia, underpinned by an
impressive performance in Japan. Challenging macro-economic
conditions resulted in declines across the Group's three largest
markets, which now represent 72% of net fees. The performance in
Germany reflected lower levels of demand for Technology skills. Our
USA performance was impacted by declines in Life Sciences and
Technology partially offset by a solid Engineering performance,
whilst the Netherlands saw lower levels of demand for Technology
and Engineering skills versus record levels in the prior
year.
Group period-end headcount was up
slightly from the end of the last financial year.
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FY
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FY
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FY 2024
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Q4 2024
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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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YoY (1)
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YoY (1)
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Contract
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£310.6m
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£343.6m
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-7%
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-12%
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-8%
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-6%
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-2%
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Permanent
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£58.5m
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£75.3m
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-18%
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-26%
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-9%
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-15%
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-21%
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GROUP
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£369.1m
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£418.8m
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-9%
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-15%
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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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£127.5m
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£148.9m
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-12%
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-18%
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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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£78.5m
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£82.1m
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-2%
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-10%
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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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£61.3m
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£70.4m
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-12%
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-14%
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-13%
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-10%
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-10%
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USA
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£82.0m
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£96.4m
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-12%
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-13%
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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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£19.7m
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£20.9m
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+4%
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-18%
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+20%
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+1%
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+20%
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GROUP
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£369.1m
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£418.8m
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-9%
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-15%
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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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£111.8m
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£130.9m
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-12%
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-17%
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-7%
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-11%
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-14%
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Netherlands
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£71.0m
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£77.1m
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-6%
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-13%
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-15%
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+6%
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UK
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£38.3m
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£45.0m
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-14%
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-21%
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-17%
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-11%
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-7%
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USA
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£82.0m
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£96.4m
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-12%
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-13%
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-10%
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-15%
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-10%
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Japan
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£10.6m
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£9.3m
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+26%
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-1%
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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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£55.4m
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£60.2m
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-6%
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-12%
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-6%
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-2%
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-4%
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Group
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£369.1m
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£418.8m
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-9%
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-15%
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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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FY 2024
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FY 2023
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Contract
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84%
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82%
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Permanent
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16%
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18%
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Skills mix
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FY 2024
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FY 2023
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Technology
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48%
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48%
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Life Sciences
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17%
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18%
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Engineering
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29%
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26%
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Other
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7%
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8%
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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 £67.4m 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
Trading Update.
If you would like to register for the conference
call, please contact SThree@almastrategic.com.
Forward looking dates
The Group
will present its results for the financial year ended 30 November
2024 on 28 January 2025.
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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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This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation. The person responsible for arranging the release
of this announcement on behalf of SThree is Kate Danson, Group
Company Secretary.
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 around
6,000 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 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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