SThree shares drop to four-year low as recruiter issues profit warning
Shares in SThree cratered on Thursday after the recruiter issued a profit warning for its current financial year, citing challening conditions in the science jobs market.
The firm’s share price tumbled as much as 39 per cent in early trading before paring some losses, making it the worst performer on the FTSE 250. The stock trading at its lowest level in more than four years.
SThree said in a trading update that it expected pretax profit to come in at around £25m for its 2025 financial year, which began on 1 December. That undershot a company-compiled analyst consensus forecasting £66.6m.
The firm said it would take up to £7m in one-off costs over the year as it seeks “further operational efficiencies” to offset the impact of “protracted challenging economic conditions”. It said these measures would realise around £6m of annual cost savings.
It warned that “increased political and macroeconomic uncertainty, particularly in Europe” would continue to impact its net fees, having already driven weakness in new business activity throughout the 2024 financial year.
SThree, which specialises in science, technology, engineering and mathematics (STEM), reported a nine per cent year-on-year fall in net fees for the financial year to 30 November.
Its fees were down 26 per cent in the fourth quarter compared to the same period last year. The firm said performance for 2024 was expected to be in line with expectations.
The update also sent down shares in other recruitment firms. Fellow FTSE 250 constituents Hays and PageGroup fell as much as 6.9 per cent and four per cent respectively.
“The nature of our business model has meant we have been able to withstand the external pressures until now,” Timo Lehne, SThree’s chief executive, said on Thursday.
“However, the anticipated easing of market conditions has not yet materialised, with delayed decision making continuing to impact new placement activity whilst contract extensions remain robust.”
Elsewhere, SThree announced its intention to launch a share buyback programme of up to £20m, to be completed over the next six months.