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SThree Q1 profit rises as international strength offsets UK weakness

Fri 15 March 2019 10:22 | A A A

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(Sharecast News) - First-quarter profit at recruiter SThree rose as strength in the international divisions offset a weaker UK performance.

In the period from 1 December to date, group profit - 85% of which is generated from markets outside the UK and Ireland - increased 9% to £78.1m. Profit in the contract business was up 12% to £57.6m while the permanent division saw profits nudge up 1% to £20.5m.

Profit in the USA and Continental Europe jumped 17% and 12% to £16.4m and £45.5m, respectively, while profit in Asia Pacific and the Middle East was 5% higher at £4.5m. In the UK & Ireland, however, it fell 7% to £11.7m.

SThree said profit in Europe was driven by Benelux and DACH (Germany, Austria and Switzerland), up 11% and 12%, respectively.

Chief executive Gary Elden said: "We have made an encouraging start to the year, with robust group gross profit growth in what is our seasonally least significant quarter.

"It is pleasing to see growth in both contract and permanent, with a particularly strong performance in contract, driven by continued progress in our key markets, Continental Europe and the USA.

"Our focus on contract and the continued strength of our performance across key regions and sectors provides resilience in today's more turbulent market conditions. Set against this context, we remain confident in achieving good growth in the current year."

Liberum said profit growth of 9% was marginally better than it had hoped for, but the fall in UK profit was "far worse" than it expected, in part reflecting lower levels of confidence amongst multi-nationals in recent weeks.

"We continue to see SThree as well positioned to capitalise on long term trends within the professional recruitment space, given its contract bias and geographic exposures. As a result, we reiterate our buy rating and 475p target price," it said.

At 1000 GMT, the shares were up 3.2% to 301.25p.

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