Shares in recruitment group SThree fell by a fifth on Tuesday morning as it warned persistent global hiring weakness will weigh on profits next year.
Britain is not alone in seeing its labour market come under pressure this year, with hiring across the US and Europe increasingly downbeat amid recession fears, inflation and trade tensions.
SThree, which specialised in science, tech, engineering and maths recruitment, told investors Tuesday that while contract hiring in the US had showed improvement in the third quarter, macroeconomic uncertainty had persisted for longer than first expected.
It now expects pre-tax profit for the year ending November 2026 to be about £10million, well below analysts’ forecasts of around £30.5million.
SThree’s net fees slumped 12 per cent year-on-year in the three months to the end of August, with contract hiring down 13 per cent and permanent recruitment down 5 per cent.
The Netherlands, the UK and Germany saw the weakest performance, with net fees down 35, 27 and 21 per cent, respectively, in each region over the quarter.
Britain is not alone in seeing its labour market come under pressure this year
However, the group achieved double-digit fee growth in the US and Japan.
SThree said: ‘Although the Group has seen positive momentum in certain markets and verticals, macro uncertainty has persisted for longer than expected, impacting levels of new business activity.
‘As a result, the Board is now taking the prudent view that this subdued activity will continue into FY26.’
The group said it remains on target for 2025 pre-tax profits of around £25million. Its lower 2026 guidance also reflects investment SThree is making to improve its long-term prospects.
SThree said it would ‘further invest in next generation AI to capitalise on the new opportunities emerging in our industry’, while lining up cost cutting efforts to ‘deliver future benefits thereafter’
It added: ‘The Board is confident that the planned investments will provide an optimised cost base for greater efficiency and scalability, and position the Group at the forefront of the AI opportunity within our industry.’
SThree shares were down 20 per cent to their lowest level in nearly 17 years at 147p. They have lost roughly half their value since the start of 2025.
Boss Timo Lehne said: ‘We are now well advanced in our journey of embedding agile, future-ready technology deep within the organisation.
‘This new digital backbone is already helping to unlock early signs of scalability with the efficiencies realised to date. It is also enhancing productivity, including improved placement levels among our most junior cohorts and a reduction in time to first interviews in our early adopter markets.
‘At the same time, we are now benefiting from actionable, data-driven insights through a unified platform, positioning us to seize rapidly emerging opportunities in our markets.
‘Our tech-enabled model gives us the platform to invest in agentic AI functionality, to deliver quality STEM candidates quicker and more efficiently, which when coupled with certain investment initiatives and further cost optimisation, will result in a stronger, more agile business.’
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