Operating profit declined to £10 million, down 73% from £37.7 million in the prior-year period
LONDON: SThree plc, a global STEM workforce consultancy, reported a significant drop in profitability for the first half of fiscal year 2025 as economic headwinds and soft market activity weighed on performance.
For the six months ended May 31, 2025, revenue declined 15% year-over-year to £648.8 million, while net fees fell 14% to £159.1 million.
Operating profit was £10.0 million, down 73% from £37.7 million in the prior-year period, with profit before tax similarly sliding 74% to £10.1 million. The operating profit conversion ratio narrowed sharply to 6.3%, compared to 20.0% last year. Basic earnings per share dropped to 5.6 pence, reflecting the steep contraction in profitability.
Despite the downturn, SThree maintained its interim dividend at 5.1 pence per share, supported by a robust balance sheet and consistent cash generation. The Group closed H1 FY25 with £47.8 million in net cash, down from £90.0 million a year earlier, primarily due to a £20 million share buyback programme that saw 7.8 million shares repurchased and cancelled.
Across its largest markets — the Netherlands, Germany and the United States — net fees decreased by 22%, 14% and 5% respectively. Contract net fees, comprising 84% of total fees, saw a 14% decline, offset partly by strong contract extensions and improved performance in the U.S. Permanent net fees also fell 13%, but showed sequential gains, bolstered by growth in Japan and the U.S.
SThree’s contractor order book stood at £163.8 million, down 8% year-over-year but retaining visibility equivalent to roughly five months’ net fees. The Technology Improvement Programme, aimed at enhancing operational efficiency, remains on track and on budget. Eight of eleven markets now operate on the upgraded infrastructure, representing over 80% of group net fees.
CEO Timo Lehne highlighted strategic progress in business transformation, stating, “We’ve launched 60 product enhancements and are developing five AI-powered features, laying the foundation for future innovation.” He added that reductions in time to first interview and productivity gains among junior consultants in Germany and the U.S. reflect early returns on the tech investment.
Looking ahead, SThree affirmed its full-year guidance of approximately £25.0 million in profit before tax. While new business activity remains subdued, the company sees encouraging momentum in select segments and expects further operational savings of £6 million in FY25.