SThree profit slumps, slashes costs

15th Jul 2013 07:31

Specialist staffing business SThree said pre-tax profit fell by more than a quarter for the half year against a backdrop of weaker macroeconomic conditions as it reduces its cost base by 8m pounds.Pre-tax profit tumbled 28.3% in the half year ended May 26th to £6.7m while revenue increased 4.8% to £291.9m. Operating profit during the period fell to £6.7m from £9.1m. Chief Executive Officer Gary Elden said it was a satisfactory first half against a backdrop of weaker macroeconomic conditions. Sthree also announced it has started a review of its property portfolio and support infrastructure."This rationalisation programme includes reducing staff numbers within the support functions, office closures and a number of other cost saving initiatives. With an implementation cost of circa £8m and a 2013 cash cost of circa £5m, the programme is expected to bring immediate cost savings of circa £3m in H2 2013 and reduce the annualised cost base by circa £8m pa, without compromising the group's ability to grow strongly when markets recover, the group explained in a company statement.Otherwise the group said it continued to invest in Contract sales headcount in growth markets, with a particular focus on Energy, up 48%, and Pharmaceuticals & Biotechnology, up 13%, since the start of the year. "Our balanced business mix between Contract and Permanent, continued drive to improve productivity and tight focus on growing teams only in selective sectors/geographies, together with the savings expected from the restructuring programme, give us confidence that we will make the best of the market opportunity in the second half, whilst managing the business prudently for the medium term," the group said. "Looking ahead, global economic conditions remain fragile and predicting the kind of market conditions the group will face in the second half with any accuracy is extremely difficult." The interim dividend has been maintained at 4.7p per share. SThree had a net cash position of £15.5m compared to £28.3m the year before after a dividend payment of £5.7m in December 2012 and capital expenditure of £3.7m. CJ