SThree announces sector-leading margins against a resilient performance in H1 FY23

SThree plc, the global staffing business focused on roles in science, technology, engineering and mathematics (STEM), has issued its financial results for the half year ending 31 May 2023.

The Group reported a resilient performance, with net fees down 2% YoY on a constant currency basis, compared with a particularly strong post-Covid period in H1 FY22, which saw Year on Year (YoY) growth of 25% against a backdrop of shifting global macro-economic conditions.

Contract net fee performance was robust and grew 3% YoY, with growth achieved across most regions. The Group has undertaken targeted investment towards Contract in specific markets, and Contract fees now represent 81% of total Group net fees (H1 FY22: 77%). The Group’s contractor order book remained flat YoY as Contract extensions offset new placement activity. The order book continues to give excellent visibility with over 75% of forecast net fees for the full year booked.

Permanent net fees were down 19% YoY, reflecting market conditions as well as the strategic decision of the business to focus on Contract.

The Group delivered a sector-leading profit margin of 18.3%, demonstrating its resilience through the current market conditions. The margin remains above FY22 levels, delivering profit before tax of £38.5m, down 20% YoY owing to planned investment in a groupwide Technology Improvement Programme and headcount to position the Group for future growth.

SThree maintains a strong balance sheet with £72m net cash as of 31 May 2023, compared with £48m on 31 May 2022.

Progress on the global Technology Improvement Programme is on track and on budget, with a sequenced rollout across the Group starting in late FY23, as noted in previous announcements.

The Group also updated on its sustainable business practice and ESG commitments, with 17,375 lives positively affected in H1 FY23 (H1 FY22: 16,540).

SThree’s renewables business increased 29% compared with H1 FY22. The Group has also confirmed a 44% carbon reduction in FY22 in comparison to 2019, our baseline year for its SBTi net zero target, which was announced during the first half of the year.

Timo Lehne, CEO of SThree, commented:

“Our focus on STEM and flexible talent has delivered a resilient performance in the first half of the year against strong comparatives and macro-economic headwinds. This was underpinned by the Group’s strategic focus on Contract, which grew 3%, following robust extensions and pricing as companies commit to holding on to required skills in the face of ongoing acute shortages.

“We have made excellent progress against the four pillars of our strategy to ensure the business has the right people, structures, and processes to support the next phase of our growth. The rollout of our Technology Improvement Programme is on track and on budget and will be a key enabler in us delivering a unique proposition within the market, driving both scale and higher margins over the mid-to-long term.

“The macro-economic backdrop remains unpredictable in the short-term, however our established leadership position and progress with our Technology Improvement Programme leaves us more confident than ever in our growth strategy.”

Notes to editors

SThree plc brings skilled people together to build the future. We are the only global STEM specialist talent partner focused on roles in Science, Technology, Engineering, and Mathematics (‘STEM’), providing permanent and flexible contract talent to a diverse base of more than 8,200 clients across 14 countries.

Our Group’s c.2,800 staff cover the Technology, Life Sciences, and Engineering sectors. SThree is part of the Industrial Services sector. We are listed on the Premium Segment of the London Stock Exchange’s Main Market, trading with ticker code STEM.