SThree profit boosted by US, Continental Europe

Recruiter SThree reported a rise in full-year pre-tax profit on Monday as it benefited from strong performances in Continental Europe and the US.

In the year to 30 November 2018, adjusted pre-tax profit increased 20% to £53.4m on revenue of £1.26bn, up 13%.

Group gross profit was up 12% in the year to £321.1m, largely delivered by its key territories of Continental Europe and the USA. The former was driven by SThree’s businesses in Germany and the Netherlands which together saw growth of 20%, whilst the latter was up 8%.

The company also said it made improvements in its other target markets, including a "standout" performance from its growing team in Japan, with gross profit there up 85%.

In the UK & Ireland, however, gross profit was down 5%, in line with expectations as Brexit uncertainty took its toll.

SThree also said it was lifting its total dividend for the year to 14.5p from 14p a share the year before.

Chief executive officer Gary Elden said: "The group continued to make good progress throughout 2018. This resulted in a strong financial performance which, demonstrating our resilience, was delivered despite the ongoing macro-economic and political uncertainties.

"Alongside the financial metrics, we delivered further structural and operational progress which will enable us to attain our vision of being the number one Science, Technology, Engineering and Mathematics recruiter in the best STEM markets. We are on track with the delivery of the five-year plan as set out at the November 2017 Capital Market Day."

The group said trading post year-end is in line with expectations and it remains well positioned to benefit from the growth opportunities in its chosen STEM markets.

Liberum said the key highlight from the FY18 results is the 4% increase in the ordinary dividend - the first increase since FY11.

"In addition to reflecting a strong set of FY18 results, this points to a positive outlook for the group and acts as a reminder of the cash generative nature of its contract book and the structural opportunities in the STEM markets in which it operates.

"Although we acknowledge the risks created by broader macroeconomic uncertainties, we believe that these are now more than discounted and reiterate our buy rating and increase our target price to 475p (from 450p)."

At 0805 GMT, the shares were up 4.8% to 285.52p.