Shares in SThree PLC plunged on Thursday as it warned tough market conditions mean profit in the new financial year will be well below market expectations.
The London-based recruiter, focused on the science, technology, engineering and mathematics fields, expects pretax profit of £25 million for financial 2025, down more than 60% from what it expects for the year just gone.
SThree said it is making the ‘prudent assumption’ that tough market conditions will persist, hurting net fees.
Panmure Liberum noted the projection compares to its £66.0 million forecast which it said is in line with market consensus.
‘We were expecting some pressure on forecasts, given no signs of green shoots in the macro yet, but the level outlined by management is significantly worse than we had feared,’ the broker remarked.
In response, shares in SThree plummeted 23% to 279.02 pence each in London on Thursday morning. Fellow recruiters Hays PLC and PageGroup PLC were down 6.9% and 3.8%, respectively.
SThree said net fees declined 12% in the financial year that ended November 30 to £369.1 million from £418.8 million. At constant currency, net fees fell 9%.
‘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,’ Chief Executive Timo Lehne said.
‘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.’
It puts market consensus for financial 2024 pretax profit at £67.4 million, which would represent a 13% fall from the £77.9 million achieved in financial 2023.
In addition, SThree announced plans to launch a new buyback of £20 million to be completed over the next six months.
‘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,’ SThree added.
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