SThree expects in line profits despite increasingly difficult backdrop

International specialist staffing business SThree on Wednesday morning emphasised the company's growing geographical diversification and that its succession plan for top management is running ahead of schedule.

However, the group's Chief Executive, Russell Clements, commented: "The Group has traded satisfactorily during the year, against a macro economic backdrop that became increasingly difficult across the period (...)."

Even so, full year profit before tax is expected to be £25m, in line with market consensus, according to the the firm.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The Group's gross profit was up 8% year-on-year with contract gross profit up 11% and permanent gross profit up by another 6%.

Rusell added that its Energy & Engineering and Pharmaceuticals & Biotechnology segments, which between them make up about one third of gross profits, continued to experience strong demand.

These businesses are making an increasingly significant contribution both to Group performance and to our ongoing geographic diversification. Nearly two thirds of fee income now being generated outside the UK&Ireland, the company explained.

Group sales headcount on November 25th was down 6% year-on-year. UK sales headcount was down 18%, while in Continental Europe headcount was down 5%, but in Rest of World headcount was up 18%. Average sales headcount for the year was up 10% year-on-year, but down 7% for the fourth quarter when compared to last year.

Similarly, the permanent deal pipeline at the period end was 4% down year on year, with weakness in UK&Ireland, France and Benelux offsetting strong performance in Rest of World and Germany.

During the most recent period the Group opened new offices in Oslo, San Diego, Rio de Janeiro and Brisbane during the year.

Lastly, SThree indicated that a number of key tasks related to the succession of its Chief Executive were completed ahead of schedule. In light of this excellent progress, Gary Elden will succeed Russell as CEO with effect from the next January 1sT 2013, at which point Russell will retire from the Board.

AB