In its 2024 year-end trading update, the drop came against a decline of 4% in FY23 down from record performance and ongoing challenging global economic conditions. 

Across SThree’s three largest countries representing 72% of group, net fees in the Netherlands were down 6%, with Germany and the US both down 12%.

The group’s net fees from engineering for the full year were largely stable, down 1% against a record prior year performance. The performances of technology and life sciences reflected tougher market conditions, declining 10% and 17% respectively, the company said.

Contract net fees, which represent 84% of group net fees (FY23: 82%), were down 7% due to “the ongoing softness in new business activity, partially offset by continued strong client extensions”, which the company described as “a demonstration of our strength in meeting clients’ needs to retain critical STEM skills and flexible talent”. 

In other FY24 highlights:

• Permanent net fees, representing 16% of group net fees (FY23: 18%), were down 18% reflecting market conditions. 
• Contractor order book of £161.3m was down 10% YoY, while continuing to represent “sector-leading visibility”, the company said, with the equivalent of about four months’ net fees. 
• SThree described its performance as “resilient”, in line with expectations, with operating profit conversion ratio maintained at 18% and profit before tax of £67.6m, down 9% YoY on a like-for-like basis owing to a decline in net fees, partially offset by cost savings and higher net interest.
• Balance sheet showed £69.7m in net cash at financial year end (FY23: £83.2m).
• The company’s Technology Improvement Programme (TIP) “remains on track”, SThree said, with around 80% of its business now successfully onboarded and actively using the platform.

Looking ahead, the company said that economic conditions affecting new business activity were expected to persist throughout FY25.

“The financial implication of these challenges is expected to be partly mitigated by the accelerated realisation of further operational efficiencies,” the company said.

“As previously announced, the board expects FY25 profit before tax to be c.£25m, which includes up to £7m of one-off costs to deliver the additional operational efficiencies.”

The SThree board said it remained confident that the group’s strategic focus on in-demand STEM skills and flexible contract placements, in addition to the completed rollout of the TIP, alongside actions being taken, would “position the Group for sustained profitable growth when markets recover”. 

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