Europe, ICT & Life Science drive GP up 10% YoY for SThree
SThree plc has issued its results for the its first quarter 2016, ending 29th February 2016, revealing Q1 group gross profit increased by 10% year-on-year, up to £58.0m from £53.5m in Q1 2015.
The contract business fared well, seeing gross profit rise up 11% YoY to £38.2m (£34.9m), while gross profit for the perm business was also up by 9% at £19.8m (2014: £18.6m).
Both results exclude energy and the group stated that its results continued to be impacted by the ongoing weak activity in the energy market. The energy business is down 34%* YoY (Q4 2015: down 37% YoY).
Continental Europe achieved the fastest growth, with gross profit totalling £27.5m in Q1 2016, up 20% from £24.2m in Q1. The USA also maintained positive momentum, achieving £10.7m gross profit in Q1 2016, up 14% from £9m in Q1 2015.
Growth continued to be slow YoY in the UK, as the Group reported Q1 2016 gross profit of £16m, up marginally from £15.9m in Q1 2015. Quarter by quarter, however, there was a marked difference from Q4 2015 when gross profit was down by 6%.
APAC and the Middle East also continue to be hit by a dip in gross profit. Q1 2016 gross profit totalled £3.8m and Q1 2015 gross profit totalled £4.4m, marking a 13% drop in gross profit.
ICT and Life Sciences were the best performing sectors, up 20% and 18% in gross profit respectively. ICT gross profit totalled £26m in Q1 2016 (Q1 2015: £22.2m) and Life Sciences gross profit was £11.5m in (Q1 2015: £9.7m).
Gary Elden, chief executive, commented, "Overall, we've made an encouraging start to the year in what is our seasonally least significant quarter. Our investment in contract and our drive to rebuild productivity in permanent is continuing to have a positive impact on the Group result. Performances from our ICT and life sciences businesses and across Continental Europe and the USA were particularly pleasing.
"Our contract business continues to perform well, with contract GP increasing by 11% year on year, reflecting our ongoing investment in sales headcount and further growth in the Contract book.
"Our permanent business benefited from a further improvement in productivity in the quarter, driven by a particularly strong performance in Continental Europe, which was up 25% YoY. Further productivity gains will remain the priority for our permanent business in 2016.
"Looking ahead, the expanded contract book and improved permanent performance give us a solid base from which to grow. While the macro economic outlook has become increasingly uncertain, with signs of slowing growth in our UK permanent business in particular, we remain confident that there are good growth opportunities for us this year across the diverse geographies and sectors that we serve."
Alex Smith, chief financial officer, commented, “SThree posted gross profit (GP) growth of 10% in the first quarter and is up 17% excluding Energy. This was driven by a very strong performance in Continental Europe, USA and across the ICT and Life Sciences sectors. Asia Pacific & Middle East, which only represents 7% of Group GP was down 13% YoY (Q4 2015: down 13%). Asia Pacific & Middle East is disproportionately exposed to Energy, which represents 23% of this region comparative to 8% of the Group. Excluding Energy, Asia Pacific & Middle East was up 4%, despite additional headwinds being felt from the knock on impacts of the slowdown in China."