Shares plunge as SThree warns on profits

(Sharecast News) - Shares in SThree plunged on Thursday, after the recruiter posted a slide in net fees and warned that the ongoing challenging market conditions would hit profits. Updating on full-year trading, FTSE 250 firm - a specialist in the science, technology, engineering and maths sectors - said group net fees were down 9% year-on-year.

Contract fell 7%, representing 84% of fees.

The contractor order book, meanwhile, was down 10% year-on-year at £161m.

SThree said: "While the group continues to expect robust contract extensions, new business activity remained weak throughout the 2024 full year, driven by the protracted challenging economic conditions, impacting the 2025 full-year performance.

"The latter part of the 2024 full year saw increased political and macroeconomic uncertainty, particularly in Europe, further delaying decision-making and the anticipated easing of market conditions."

SThree said the 2024 full-year performance was still expected to be in line with market consensus.

But it warned the poor conditions were set to continue throughout the 2025 full year, impacting net fees. It now expects pre-tax profits of around £25m in the current year, which started on 1 December. Analysts had previously forecast pre-tax profits closer to £66m.

As at 0830 GMT, the stock had slumped 22% to 280p.

Timo Lehne, chief executive, said: "The nature of our business model has meant we have been able to withstand the external pressures until now. However, the anticipated easing of market conditions has not yet materialised, with delayed decision making continuing to impact new placement activity while contract extensions remain robust.

"With this dynamic expected to persist through next year, the board has taken a prudent view of the 2025 full year."

"We nonetheless remain confident that we have the right strategy."