International recruiter SThree has just released its financial results for the year ending 30th November 2016, and the chill wind of Brexit apprehension has clearly had an effect on its UK operations.
As measured in constant currency, the company eked a two per cent year-on-year rise in overall group gross profit (GP), but Brexit uncertainties resulted in an eight per cent year-on-year fall in GP for its UK and Ireland business.
Significantly, the company’s overall GP was boosted by an eight per cent year-on-year rise in contracting placements but simultaneously diminished by an eight per cent decline in permanent placements. At 67 per cent, Contract accounted for the lion’s share of the recruiter’s group GP, a rise of three percentage points on last year’s total. Permanent constituted 33 per cent of group GP.
Overall revenue climbed from £848.8 million in 2015 to £959.9 million in 2016, a rise of six per cent in constant currency.
Operations in the Asia Pacific and Middle East regions both saw gross profit decline by 15 per cent, while US operations remained at a standstill compared to the previous financial year. Meanwhile, group GP for Continental Europe surged by 13 per cent year-on-year in constant currency.
The recruiter has five core sectors: Information and Communications Technology (ICT), Engineering, Banking and Finance (each of which are core disciplines for high-end Umbrella Company Employees and other contracting professionals), Life Sciences and Energy.
ICT remained at the top of the company’s gross profit league table, representing 45 per cent of its group GP in 2016, a year-on-year increase of 12 per cent. Engineering also saw encouraging growth year-on-year, climbing by nine per cent in constant currency, while Life Science climbed by eight per cent.
Banking and Finance, meanwhile, plunged by nine per cent year-on-year, while Energy crashed by 30 per cent – a decline that SThree attributed to the impact of low oil prices, especially in the Asia Pacific, Middle Eastern and US regions. The company expects business challenges to continue in the Energy sector this year.
SThree CEO Gary Elden said that the solid overall performance of the company had been helped by its main focus on growing its Contract business, which brought resilience to its earnings and enabled it to withstand the turbulent political and economic uncertainties of 2016.
He added: “Looking ahead, the heightened level of political and economic uncertainty remains the primary feature of our trading outlook. Against this backdrop we will continue to focus on the Contract market, where we see attractive growth opportunities and which is more resilient in periods of economic uncertainty.”