SThree gross profit up 6% YoY
SThree plc has issued a trading update for the half year ended 31st May 2016.
Group gross profit ("GP") increased by 6% YoY, with Q2 up 2%, versus growth of 10% in Q1 2016. SThree states that Q2 GP was impacted by the ongoing weak activity in the energy market and the more difficult market conditions in banking & finance in both the UK and US. ICT performed strongly with GP up 18% YoY.
It says that contract continues to deliver a strong performance, with GP up 11% YoY for the first half (up 14% excluding energy) and up 10% in Q2 (up 13% excluding energy). A large proportion of this growth was driven by Continental Europe up 19% and the USA up 15%.
Permanent GP was down 2% YoY and down 12% in Q2, versus growth of 9% in Q1 2016. Although down overall, Q2 saw particularly strong growth in DACH and Benelux, up 19% and 16% respectively, offsetting weaker performances in banking & finance down 24% YoY and energy down 77% YoY. Consistent with our strategic focus, permanent productivity per sales head was up 5% YoY in the half year, with average heads down 7%.
Average group sales heads were up 6% YoY. UK&I sales headcount was down 1% YoY, Continental Europe was up 9%, USA was up 26% and Asia Pacific & Middle East was down 14%. Contract sales headcount represented 61% of total sales headcount at the end of the half year (2015: 55%), up 17% YoY.
Net debt at 31st May 2016 was circa £4m (31st May 2015: £10m). The group has a £50m revolving credit facility ("RCF") with RBS and HSBC, which is committed to 2019.
Gary Elden, chief executive, commented, "The group experienced mixed trading conditions in the period. Our contract business continued to perform well, with GP increasing by 11%* year on year. ICT growth was strong, with GP ahead by 18%* year on year, and Continental Europe was once again our fastest growing region, underpinned by a strong performance in DACH, where GP was ahead by 22%* year on year. However, it is also clear that the uncertainty created by the forthcoming EU Referendum has led to a slowdown in our UK business, and weak energy and banking & finance markets impacted our US growth rate. Our US ICT and life sciences contract businesses continued to report good growth but we have moved to address some short term execution issues. These measures will begin to take effect over the second half.
"Looking ahead, the continued momentum of our contract business and improved permanent yields give us a solid base from which to grow in a macro-economic environment which remains uncertain; in addition, restructuring measures taken in our energy, banking & finance and UK businesses will benefit future periods. We remain confident that there are significant growth opportunities for us across the diverse geographies and sectors that we serve."