Specialist recruitment firm SThree (STEM) posted a 111% increase in pre-tax profits to £60 million for the year to November on a constant currency basis thanks to record demand for staff in its key areas of science, technology, engineering and mathematics.
The group also said current trading was ahead of expectations meaning current year net fees and profits would rise by double digits, sending the shares up almost 10% to 458p.
GROWTH BEATS ESTIMATES
Net fee income rose 19% on a constant currency basis to an all-time high of £356 million. Growth in the Netherlands, Germany and the US, the group’s largest markets accounting for nearly three quarters of net fees, was 20% or more with strong demand in all the group’s specialties.
Contract fees, which also represent three quarters of the total, rose 17% to a record level with the order book up 43%, ahead of forecasts.
Interim chief executive Timo Lehne said growth was broad-based: ‘We saw demand for STEM skills increase across all of our key markets, whether it is engineers building green infrastructure, developers aiding digital transformation or the scientists helping to develop the next life-changing drug’.
EXPERT VIEW
Liberum analyst Sanjay Vidyarthi said today’s results were at the top end of his estimates and ‘should assuage any concerns’ that growth has peaked.
Moreover, management guidance of double-digit fee income and profit growth for the current year together with a forecast of higher margins in future means he is raising his earnings per share target by 4% for this year and 12% for next year.
Despite today's bullish reaction, given the pull-back in the shares from their November peak of 600p to as little as 400p this month, Vidyartha recommends buying with a 12-month target price of 680p.
