SThree falls after posting drop in half year margins

14th Jul 2014 15:26

A drop in gross margins from 31.6% to 29.5% pushed shares in staffing group SThree lower on Monday, despite a jump in half year pre-tax profit. Helped by an improved macroeconomic situation, reported before tax climbed from £6.7m to £8.2m on revenue of £341.7m (H1 2013: £291.9m). Basic earnings per share climbed from 3.7p to 4.7p. However, the decision to re-mix towards Contract revenues affected margins, with overall costs for the period rising from £197.89m to £240.91m. Chief Executive Officer Gary Elden said: "As expected, the group performance improved during the first half as the economic recovery gained momentum in a number of our markets. "Contract made further progress in all territories as it continued to benefit from a greater strategic focus and increasing exposure to new global high growth markets, particularly Energy and Life Sciences. Contract gross profit increased by 22% year-on-year and now accounts for 60% of group gross profit." Looking ahead, the company is focused on increasing the productivity of new hires, particularly in Permanent, with headcount growth moderating. "As we look forward, the strength of our Contract book, investment in headcount and benefits of the restructuring in the second half of last year will provide the group with a solid platform for growth and operational gearing into recovery," Elden continued. "Our seasoned home-grown management team and strong financial position give us confidence in the medium term prospects for the business."Shares had fallen 2.59% to 384.75p by 15:23.NR