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SThree profits rise despite tough jobs market

21/07/2008 08:54

LONDON (Reuters) - British recruitment firm SThree reported a 14 percent rise in half-year pretax profit, in line with expectations, on strong international growth but said the slowdown in UK financial sector recruiting continues.

SThree, which provides information technology (IT) specialists for a variety of sectors including investment banking, said half-year pretax profit after exceptional items increased to 21.8 million pounds on revenues 23 percent higher at 295.4 million pounds.

Gross profit for the six months to the end of June rose 24 percent to 102.5 million pounds, meeting market expectations.

Seymour Pierce analyst Kevin Lapwood said in a note prior to the results that gross profit should be up about 21 percent at around 100 million pounds. Exposure to financial services was around 15 percent but demand elsewhere was expected to remain robust, he said.

The staffing firm’s UK division, which represents some two-thirds of the group, delivered an 8 percent increase in gross profit to 60 million pounds, despite difficult conditions.

"The UK market has seen a significant impact from the fallout of the credit crunch with the investment banking market being the worst affected sector. But oil and gas has been good, as has IT," Russell Clements, the group’s Chief Executive Officer told Reuters.

The London-based group said its international business performed particularly strongly with gross profit rising 58 percent to 42.4 million, largely down to growth in continental Europe.

During the period SThree opened new offices in Dubai, Sydney, Paris and Amsterdam and will continue to do so as it looks to reduce its reliance on the struggling UK market.

"Although we’re expanding into the Middle East and the Far East we don’t have to focus on these areas as there is significant growth to be had in places like Germany and France where the potential is exceptional," said Clements.

A poll of analysts by Reuters Estimates projects SThree will deliver full-year pretax profit of 61 million pounds, which Clements said the group is comfortable with.

"We’re happy with 60ish (million pounds) in terms of pretax for the year. Last year was just over 50 million so over 60 would represent good growth," said Clements.

At 8:15 a.m., shares in SThree were trading 2.6 percent or 4 pence higher at 157 pence.

Looking ahead, SThree said it was confident the specialist staffing market would show great resilience, adding it was "realistic but positive" about the full-year and beyond.

(Reporting by Rhys Jones; editing by Rory Channing)




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