SThree reports a 7% decline in half-year net fees as Coronavirus weighs on demand

SThree (LON: STEM) said on Monday that its net fees in the first half (H1) came in 7% lower. The company attributed the decline to the Coronavirus pandemic that is pushing companies into freezing recruitment with its businesses in Japan and the United Kingdom posting the broadest impact.

Shares of the company are currently about 4% down on Monday. At £2.6 per share, SThree is roughly 30% down year to date in the stock market after recovering from a low of £2.0 per share in May. Learn more about how to choose winning stocks.

SThree suspended staffing activities in April

The recruitment industry has taken a massive hit due to COVID-19 that has so far infected a little under 300,000 people in the UK and caused more than 41,500 deaths. SThree approached the government in May seeking £50 million in financial support under the UK’s CCFF facility.  

As PM Johnson’s administration resorted to a nationwide lockdown to minimise the fast spread of the novel flu-like virus, SThree announced to have suspended its staffing activities in April. In a bid to shore up finances and cushion the economic blow from the virus outbreak, the British firm also resorted to cutting the dividend and slashing salaries of its management. According to CEO Mark Dorman of SThree:

“Whilst lockdowns are currently being eased to differing extents globally, we still see heightened uncertainty continuing for some time.”

SThree reports £151.2 million in H1 net fees

The London-headquartered recruiting firm hires employees in various sectors, including energy, pharmaceutical, finance, engineering, banking, and technology. In its report on Monday, the company said its net fees came in at £151.2 million in the six months that ended on 31^st May. In the same period last year, SThree had recorded its net fees at a much higher £163 million.

While the net fees, as per the company, declined in all regions, the sharpest decline was seen in the United Kingdom and Japan at 24% and 14% respectively in the first half.

Its peers, including Hays, Robert Walters, and PageGroup have also announced aggressive measures like job cuts, furloughs, and a slash on salaries in recent months to survive the ongoing health crisis.

At the time of writing, the international specialist staffing organisation has a market cap of £352.06 million and a price to earnings ratio of 8.57.