September 15, 2017 / 6:42 AM / 10 months ago

Recruiter SThree sees higher profit as Europe and U.S. shine

(Reuters) - British recruiting firm SThree (STHR.L) expects annual adjusted pretax profit to be above the market consensus, helped by a strong performance in continental Europe and the United States, its two biggest markets, the company said on Friday.

The consensus for the year ending on Nov. 30 is 42.4 million pounds, with a forecast range of 39.3 million pounds to 45.6 million, SThree said. The company’s adjusted pretax profit last year was 40.8 million.

“With an encouraging outlook for both these regions, and signs that the UK may have reached a point of inflection, the company is well positioned going into the fourth quarter,” Liberum, which rates SThree as “buy”, said in a note.

Shares in SThree rose 2 percent at 337.5 pence by 0705 GMT, making it the second highest gainer on the FTSE All Share Support Service Index .FTASX2790. The stock, which has risen 9 percent this year, was at its highest since Feb. 9.

SThree, which places people with financial, energy, banking and pharmaceutical companies, also said in a trading update that its gross profit at constant currencies rose 5 percent to 73.7 million pounds for the quarter to June 1.

Gross profit at constant currencies for the United Kingdom and Ireland fell 10 percent to 14.5 million pounds as conditions remained challenging in the market following Britain’s vote to leave the European Union and public sector reforms.

Gross profit is a key performance indicator for staffing companies as it represents total fees earned from all recruitment activities.

For continental Europe, it rose 6 percent to 37.9 million pounds and it jumped 20 percent in United States 17.3 million pounds, SThree said.

The company, which generates 80 percent of its gross profit outside the United Kingdom, said gross profit from contract hiring rose 9 percent, helped by growth in engineering and life sciences businesses.

SThree said in June its energy business was less reliant on the oil and gas sector, which has been hit by low energy prices, and also that it was putting less focus on investment banking as the Brexit vote led to a hiring freeze.

Reporting by Noor Zainab Hussain in Bengaluru; editing by David Clarke

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