SThree (STEM) H1 2025 earnings summary

Executive summary

• Net fees declined 14% year-on-year to £159.1m, with operating profit down 72–73% to £10.0m, reflecting challenging market conditions, but sequential improvement was observed, especially in the US.

• Technology Improvement Program (TIP) rollout now covers over 80% of business, supporting operational efficiencies, productivity gains, and cost savings.

• Interim dividend maintained at 5.1p per share, supported by a robust balance sheet and strong cash generation.

• Share buyback of £20m completed, with 7.8m shares cancelled.

• Full-year guidance reaffirmed, with performance expected to align with £25m PBT target.

Financial highlights

• Revenue for H1 FY25 was £648.8m, down 15% YoY; net fees were £159.1m, down 16% reported and 14% like-for-like.

• Operating profit conversion ratio dropped to 6.3% from 20.0% YoY.

• Basic EPS was 5.6p, down from 21.2p YoY; net cash at period end was £47.8m.

• Contractor order book at £163.8m, down 8% YoY, equating to about five months' net fees.

• Free cash flow conversion ratio improved to 105% despite the share buyback.

Outlook and guidance

• Full-year PBT guidance reaffirmed at c.£25m, with sector-leading visibility from a strong contractor order book.

• Operational efficiencies on track to deliver £6m in-year net savings.

• Productivity expected to moderate near term but improve mid-term as digital investments deliver benefits.

• TIP on track to complete by end of FY2025, with CapEx and OpEx within original budget.

• Pockets of improving momentum in US and Japan; permanent market expected to recover first when broader markets improve.