SThree’s H1 profit tanks 48% as COVID-19 halts hiring

In a report on Monday, SThree Plc (LON: STEM) said its profit in the first half (H1) of the ongoing financial year came in almost 50% lower on Monday. The company attributed its decline to the Coronavirus pandemic that froze new hiring in recent months.

Shares of the company were reported 4% lower in premarket trading on Monday. At 268 pence per share, SThree is currently more than 25% down year to date in the stock market after recovering from an even lower 200 pence per share in May. Learn more about how to invest in the stock market.

SThree reports a 7% decline in net fees

According to CEO Mark Dorman:

“There is no doubt that the pandemic has turned working practices on their head and accelerated trends such as flexible working.”

As the Coronavirus pandemic that has so far infected more than 14 million people worldwide and caused over half a million deaths wreaked havoc on the global recruitment industry, SThree resorted to slashing management salaries and cutting its dividend to shore up finances in April. The company also suspended all of its hiring activities in recent months.

Operational in sixteen countries, SThree saw a 7% decline in net fees to £151.2 million in the first half. Permanent fees, it added, was 13% down while contract fees noted a 5% decline in H1.

Liberum analysts, however, expressed confidence that the company is positioned well to weather the impact of COVID-19, thanks to its robust balance sheet. As of the end of May, SThree had £31 million in net cash and £136 million in immediately accessible liquidity. Its peer, Hays, also reported a 34% decline in net fees in the fourth quarter last week.

SThree prints an 8% decline in revenue

The London-based company is a prominent name that hires employees for companies in the technology, engineering, pharmaceutical, banking, energy, and finance sectors. At £12.6 million, SThree said that its pre-tax profit on an adjusted basis in the first six months of the financial year came in 48% lower than £24 million in the same period last year.

In terms of revenue, the British international specialist staffing organisation printed an 8% decline in H1 to £602.6 million. In the second quarter alone, its revenue tanked 12%.

At the time of writing, SThree is valued at £356.07 million and has a price to earnings ratio of 8.67.