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SThree touts tech strategy despite interim profit drop on expenses

25th Jul 2023 08:44

(Alliance News) - SThree PLC on Tuesday remained confident in its growth strategy despite tricky macroeconomic conditions, as profit fell over the first half on increased expenses and planned investments.

For the six months ended May 31, the London-based staffing company reported pretax profit of GBP38.5 million, down 13% from GBP44.3 million a year prior. Operating profit fell to GBP38.1 million from GBP44.6 million. Earnings per share were 21.0 pence, down from 24.1p year-on-year.

Revenue, meanwhile, rose 6.9% to GBP825.2 million from GBP772.2 million.

The distinction was in part driven by increased operating expenses, up 8% to GBP170.5 million from GBP158.4 million year-on-year. SThree attributed these not only to increased personnel costs, as headcount rose 5% from the previous year, but also to a GBP2.6 million expensed investment in its technology improvement programme.

Of the programme, Chief Executive Timo Lehne said: "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."

Looking onwards to the second half of the year, SThree warned that macroeconomic conditions continue to be "varied".

However, the firm assured investors that contract extensions remain strong, supported by "modest improvement" in new placement activity in June, which itself was slightly ahead of the second quarter average.

While SThree noted it was "too early" to know whether this was an improving trend, it continues to trade in line with market expectations for the full-year.

"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," said Lehne.

The board proposed an interim dividend of 5.0p, unchanged from a year prior.

SThree shares were trading 2.6% higher at 358.20 pence each in London on Tuesday morning.

By Holly Beveridge, Alliance News reporter

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