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Recruitment player SThree has confirmed it managed to grow revenue and gross profit in the first half of FY12 (to end May). That’s despite a “deterioration in the macro-economic situation” that was especially noticeable, according to the company, in Q2. However, increased costs meant a fall in operating profit and PBT. Shares are down slightly (by 1.3%) in early trading.
We already knew that SThree had grown H1 gross profit by 12% at constant currency (see SThree has “satisfactory” H1), thanks to its update last month. Meanwhile, total revenue was up 9% to £278m. But the profit news in today’s announcement is less positive. The costs of continuing the company’s international expansion, coupled with the lower productivity of less established teams, meant that operating profit and PBT both fell by 17%, to £9.1m and £9.3m respectively.
That said, it’s hard to fault SThree’s strategy or execution of it. The diversification of the business internationally and across new segments continues to pay dividends. Indeed, the company’s original business focus - ICT in the UK - now accounts for just 20% of total gross profit (compared to 22% in H1 of FY11). Meanwhile, growth is coming from other countries and other recruitment specialisms. SThree’s interests outside Europe, expanded especially strongly, with 42% growth in H1 gross profit on a like-for-like basis, driven by the US and Australia. That compares to just 2% gross profit growth in the UK.
Today's results also contain further assurances that CEO-in-waiting Gary Elden is working closely with long-standing SThree chief Russell Clements, ahead of the latter’s retirement in April 2013. You couldn’t ask for a much more orderly transition than that, although as we’ve said before (see Changing of the guard at SThree), Clements is a tough act to follow.
