SThree (LSE:STEM) reported net fees of £147.7 million for the six months to 31 May, down 7% year-on-year at constant currency, as growth in the USA and Japan partly offset declines in Germany and the Netherlands.
Profit before tax fell 75% to £2.7 million, hit by £6.4 million of non-recurring costs tied to the group's cost optimisation programme, though disciplined cost management cushioned the impact.
The global STEM workforce consultancy said contract net fees, 85% of the group total, fell 8% year-on-year but improved sequentially, from a 10% decline in the first quarter to 6% in the second. The contractor order book rose 3% to £157.2 million, described as sector-leading visibility equivalent to roughly five months of net fees. Permanent net fees fell 5%, a smaller decline than the prior year, helped by strong growth in Japan. Net cash stood at £43.0 million, down from £48 million a year earlier.
"Trading momentum improved through the first half despite continued macroeconomic and geopolitical uncertainty, with strong performances in the USA and Japan, stable year-on-year new business activity and a return to growth in our contractor order book," said chief executive Timo Lehne.
The board said it remains "cautiously optimistic", citing improving new business activity across a growing number of countries and continued momentum in the USA and Japan. SThree reiterated its full-year profit before tax guidance of approximately £10 million, with benefits from its cost optimisation programme weighted to the second half.
The group will publish its third-quarter trading update on 22 September.
News Intelligence what this means for the company
SThree held its full-year profit guidance at £10 million despite a 75% profit collapse in the first half to £2.7 million, cushioned by £6.4 million in one-off restructuring costs. The company pointed to sequential improvement in contract fee declines (from −10% in Q1 to −6% in Q2), a return to contractor order book growth (+3% to £157.2 million), and improving contract new-business activity notably in the USA and Japan as evidence that momentum is turning. The guidance rests on cost-optimisation benefits weighted to the second half, making the September trading update critical to validate the turnaround narrative.
The half-year results show stabilisation in the core contractor business (the 85% revenue driver) but do not yet prove the £10 million full-year target is achievable; net cash of £43 million provides a buffer, but the company's ability to deliver second-half cost savings and sustain new business momentum remains unproven. Guidance retention is cautious rather than confident, and the September update will be the first real test of whether the improving trends are durable.
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