Less hiring in the banking sector in the run-up to the EU referendum has taken its toll on SThree's profits, the staffing company revealed in its interim results today.
The company, which is focused on finding staff to fill STEM roles, reported profits before tax of £12.8m for the half year to May, down seven per cent from the prior year's £13.8m. However, this year's figure included £2.3m of restructuring costs.
Meanwhile, revenue for the period increased to £443.5m, up 10 per cent on £403.6m the year before.
The company's net debt position also improved, going from £9.5m at the end of May last year to £4.4m at the end of May this year.
Shares in the company were trading down 6.6 per cent at 227p at time of writing.
Why it's important
Various reports hinted at a recruitment slowdown as the UK's referendum on EU membership loomed, but SThree's results show the effects on hiring in black and white.
The results showed that the company's banking and finance division had fared particularly badly. However, growth in ICT work was strong, with gross profits up by 18 per cent on a constant currency basis.
Gross profit from contract work, which accounts for two-thirds (67 per cent) of the recruiter's gross profits, was up by 11 per cent. As gross profits from filling permanent roles was also down by two per cent in the same period, this may confirm some of the speculation that employers would shift to hiring temporary staff, thanks to the uncertainty of the EU referendum.
What SThree said
"When there's uncertainty, which there has been leading up to the Brexit vote, then companies are less likely to take a permanent person on," Gary Elden, SThree's chief executive told City A.M. "A permanent person is less likely to leave his current job because he's worried about the uncertainty, so then the knock-on effect is we still need a person to do a job because it's critical then the only other option is to take a contractor on."
Commenting on the slowdown of hiring in the banking sector, Elden remarked that the firm experienced a bigger hit in its second quarter compared with its first quarter. "That was a slight shock to us because we felt the confidence was coming back slightly," Elden said.
Looking ahead, Elden said it was too early to tell what the Brexit vote meant for recruiters. "We're looking at parts of our business that will hopefully be less affected so we can position our business so we can use it as an opportunity," he added.
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