SThree shares plunge 22% as fees slide; firm warns slowdown to persist into FY26

Investing.com -- Sthree Plc (LON:STEMS) shares fell more than 22% on Tuesday after the staffing company reported a 12% decline in third-quarter net fees, as weakness in Germany, the Netherlands and the UK outweighed growth in the United States and Asia.

Group net fees for the quarter ending Aug. 31 fell to £81.5 million from £92.7 million a year earlier. Contract fees, which make up 83% of the total, dropped 13% to £67.9 million, while permanent placements slipped 5% to £13.6 million. 

The contractor order book was down 6% at £156 million, equivalent to about five months of fees. The company reported £42 million in net cash at the end of the quarter.

Regional performance was mixed. Net fees in the U.S. rose 17% to £22.5 million, while the Middle East and Asia gained 22% to £5.8 million and Japan advanced 20% to £3.8 million.

But the company’s largest European markets contracted sharply: Germany fell 21% to £23.6 million, the Netherlands slumped 35% to £11.3 million and the UK dropped 27% to £7 million. Across the rest of Europe, fees were down 16%.

By sector, engineering was broadly flat, down just 1% year-on-year, but life sciences declined 12% and technology fell 22%. Group headcount was 16% lower than a year earlier, reflecting natural attrition and selective hiring as part of efficiency measures.

Chief Executive Timo Lehne said performance improved sequentially and highlighted strength in the U.S. and Middle East and Asia. However, he acknowledged persistent challenges in new business activity, particularly in Europe. 

Lehne pointed to benefits from the company’s Technology Improvement Programme, which is nearing completion, and announced plans to increase investment in artificial intelligence tools to improve efficiency and scalability.

While reaffirming its guidance for fiscal 2025, the board said it expects “this subdued activity will continue into FY26,” citing the longer-than-anticipated persistence of weak new business demand.

The company also said it plans to launch another share buyback program, with details to come early next year.