SThree Plc (LSE:STEM) saw its shares fall more than 22% after reporting a 12% decline in third-quarter net fees, with weakness in Germany, the Netherlands, and the UK outweighing growth in the United States and Asia.
Group net fees for the quarter ending 31 August fell to £81.5 million from £92.7 million a year earlier. Contract fees, which account for 83% of total net fees, dropped 13% to £67.9 million, while permanent placements fell 5% to £13.6 million. The contractor order book decreased 6% to £156 million, representing roughly five months of fees. The company reported £42 million in net cash at the quarter’s end.
Regional performance was mixed. Net fees in the US rose 17% to £22.5 million, the Middle East and Asia increased 22% to £5.8 million, and Japan grew 20% to £3.8 million. However, major European markets showed steep declines: Germany fell 21% to £23.6 million, the Netherlands dropped 35% to £11.3 million, and the UK fell 27% to £7 million. Across the rest of Europe, fees were down 16%.
By sector, engineering remained largely stable with a 1% decline, while life sciences fell 12% and technology decreased 22%. Group headcount was 16% lower than a year earlier due to natural attrition and selective hiring as part of efficiency measures.
CEO Timo Lehne noted sequential improvement in performance and highlighted strong results in the US and Middle East and Asia. He also acknowledged ongoing challenges in European new business activity. Lehne emphasized the near-completion of the company’s Technology Improvement Programme and announced plans to increase investment in AI tools to boost efficiency and scalability.
While reaffirming guidance for FY25, the board cautioned that subdued activity is expected to continue into FY26, reflecting prolonged weakness in new business demand. The company also announced plans for a new share buyback program, with details expected early next year.
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