SThree's (STHR) shares fell nearly 5 per cent on the back of these figures after the recruiter reported a 26.9 per cent decline in first-half operating profit to £6.7m. Much of that reflected tough trading conditions in the UK and Ireland, where gross profits fell 12 per cent to £30.5m and permanent placements fell 24 per cent - although average fees held up well. Trading in continental Europe wasn't much better, either, and gross profits there fell 7 per cent to £46m, as permanent placements slipped 14 per cent.
Management has responded to the tough conditions in its traditional information and communications technology sector by expanding into newer areas - these include pharmaceuticals and biotechnology, energy and engineering. Indeed, these sectors generated 36 per cent of gross profits, up from 32 per cent a year earlier. Moreover, the group's performance outside the UK and Europe was more encouraging, with gross profits up 11 per cent at £17.5m. That was underpinned by the US market, where profits jumped 30 per cent, thanks to a notable contribution from energy, pharmaceutical and biotechnology recruitment. Profits from the rest-of-the-world division's contract placements grew 44 per cent, too.
UBS expects full-year pre-tax profit of £15.3m, giving adjusted EPS of 13.2p (from £25.3m and 14.1p in 2012).
| STHREE (STHR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 346p | MARKET VALUE: | £424m | |
| TOUCH: | 346-354p | 12-MONTH HIGH: | 368p | LOW: 256p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 42p* | NET CASH: | £15.5m | |
| Half-year to 26 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 278 | 9.29 | 5.2 | 4.7 |
| 2013 | 292 | 6.65 | 3.7 | 4.7 |
| % change | +5 | -28 | -29 | - |
Ex-div: 6 Nov Payment: 6 Dec *Includes intangible assets of £13.3m, or 11p a share | ||||
