Recruitment specialist SThree has issued a profit warning as it said employers were still delaying hiring across Europe, sending its share price tumbling.
The London-listed firm, which recruits for science, technology, engineering and maths (STEM) roles, said it now thinks the challenges could persist into 2025.
The company said its net fees for the year to the end of November totalled £369.1 million, 9% lower than the previous year, with a sharper decline over the past three months.
Fees within Germany, its biggest market, were down 12% year-on-year, and declined 14% in the UK.
Shares in the business declined by more than a quarter on Thursday, hitting the lowest level in four years.
It also sent shares in fellow recruiters Hays and PageGroup lower.
New business activity remained weak throughout the year, driven by ongoing challenging economic conditions, SThree said.
As has been widely reported across our industry, the past year has been characterised by protracted challenging market conditions which have impacted new business activity
The last few months of the year were worsened by heightened political and macroeconomic uncertainty, particularly in Europe, which it said further delayed firms’ decision-making and pushed back expectations for when conditions will improve.
In recent months, the UK Government delivered its autumn Budget with tax measures set to raise £40 billion extra a year in revenue.
France has also experienced significant political instability, with the recent resignation of its prime minister following a no-confidence vote plunging the country into deeper uncertainty.
SThree said it was now expecting its pre-tax profit for the 2025 financial year, which began on December 1, to be about £25 million.
This marks a sharp downgrade from the roughly £67 million profit that analysts were estimating, based on a consensus compiled for the company.
It said the new guidance takes into account an expected hit of up to £7 million from one-off costs needed to improve operational efficiencies.
The business is hoping to initiate changes that will ultimately save it about £6 million a year.
Timo Lehne, SThree’s chief executive, said: “As has been widely reported across our industry, the past year has been characterised by protracted challenging market conditions which have impacted new business activity.
“The nature of our business model has meant we have been able to withstand the external pressures until now.
“However, the anticipated easing of market conditions has not yet materialised, with delayed decision-making continuing to impact new placement activity whilst contract extensions remain robust.
“With this dynamic expected to persist through next year, the board has taken a prudent view of FY25 (the 2025 financial year).”
Mr Lehne said its customers extending contracts with the recruitment firm reflect the value placed on “critical STEM roles”, amid new technology and ways of working driving changes to the wider jobs market.
