UK's SThree warns of profit hit from weak jobs market, shares slump

By Raechel Thankam Job

(Reuters) - British recruiter SThree warned on Tuesday that a weak jobs market will keep profit below market expectations in its next financial year, sending its shares down 28% to their lowest in nearly 17 years.

Inflationary pressures in Europe, recession fears and trade tensions triggered by U.S. President Donald Trump's tariffs, have dampened the confidence of employers and job seekers considering permanent job moves.

While contract hiring in the U.S., its second-largest market, showed improvement and contributed to net fees in the third quarter, the company said macroeconomic uncertainty, particularly in Europe, had persisted longer than anticipated.

SThree, which specialises in science, technology, engineering and mathematics recruitment, expects pre-tax profit for the year ending November 2026 to be about 10 million pounds ($13.6 million).

Analysts on average had forecast about 30.5 million pounds, according to a company poll.

"As we look further ahead, we are encouraged by pockets of improving momentum. However, we have not yet seen a broader market recovery and, prudently, do not think this will start to materialise near term, albeit not worsen," CEO Timo Lehne said.

SThree plans to pursue additional cost-savings measures in fiscal 2026, including increased investment in artificial intelligence.

The company's shares slumped 23.1% to 143 pence by 0715 GMT, pulling down the shares of rivals PageGroup, Hays and Robert Walters by between 1% and 3%.

Net fees from SThree's largest market, Germany, fell 21% in the third quarter ended August 31, while the U.S. returned to growth with a 17% rise, supported by demand for skills in the energy sector. Overall, group net fees fell 12% to 81.5 million pounds.

SThree reaffirmed its fiscal 2025 pre-tax profit expectations of 25 million pounds.

($1 = 0.7334 pounds)

(Reporting by Raechel Thankam Job in Bengaluru; Editing by Sherry Jacob-Phillips and Jacqueline Wong)