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(Sharecast News) - Science, technology, engineering and mathematics (STEM) specialist recruiter SThree reported revenue of £1.663bn in its final results on Tuesday, marking a 1% increase.
The FTSE 250 company said net fees, however, decreased 3% to £418.8m in 2023, while operating profit slipped 2% to £76.4m.
Its operating profit conversion ratio improved to 18.2%, an increase of 0.2 percentage points.
Profit before tax increased 1% to £77.9m, and basic earnings per share rose 4% to 42.4p.
The board proposed a final dividend per share 5% higher than the prior year, of 11.6p, resulting in a total interim and final dividend per share of 16.6p, up 4%.
Notably, the company's net cash increased 27% to £83.2m.
Operationally, SThree reported a mixed year across different segments, noting that on a like-for-like basis, group net fees decreased 4%, mainly due to a challenging global economic backdrop following a record prior year with 19% growth.
Net fees in the Netherlands increased 3%, while Germany and the United States saw declines of 4% and 14%, respectively.
Within skill verticals, engineering demonstrated growth of 17%, while technology and life sciences saw declines of 2% and 21%, respectively.
Contract net fees, which now represented 82% of group net fees, increased 1%, primarily driven by robust contract extensions.
In contrast, permanent net fees, representing 18% of group net fees, declined 22% due to challenging market conditions and a strategic shift towards contract roles in specific markets.
The company said its contractor order book stood at £184m, providing significant visibility for the future, equivalent to around four months of net fees.
SThree reported a profit before tax of £78m, slightly below the prior year on a like-for-like basis.
That was attributed to a number of factors, including the timing of technology improvement programme expenses, lower-than-expected final bonus and commission payments, and the release of specific bad debt provisions after successful collections.
The board said the technology improvement programme (TIP) remained on track and on budget, with its first iteration now implemented in the US business.
It said the programme aimed to enhance the company's proposition across core markets and drive scalability and higher margins over the medium to long term.
Looking ahead, SThree said it anticipated continued strength in contract extensions but notes subdued new business activity.
Productivity normalisation, along with deferred TIP costs, was expected to impact the conversion ratio in 2024 compared to 2023, although the company expected to maintain a sector-leading position.
The focus remained on the phased rollout of the technology improvement programme across the entire group to strengthen the company's position for long-term growth.
"Notwithstanding the broader challenging economic environment, our delivery this year has been resilient, especially against the context of a record prior year," said chief executive officer Timo Lehne.
"Our unique model and strategic focus have benefitted us throughout the year, with our core areas of focus, STEM skills and flexible talent, benefitting from structural growth drivers and providing us with a strong platform both now and over the long term.
"Following the successful roll-out of the first iteration of our technology improvement programme in one of our most complex regions yielding positive feedback from candidates, clients and our teams, we look forward to the next phase of sequential implementation across Germany, the UK and the Netherlands."
Lehne said the opportunity was extensive, both operationally and commercially, with the ultimate goal of driving scale and higher margins for the group, adding that in the year ahead it expected to be able to share some early proof points.
"We have been consciously investing in and positioning the business for future growth and, whilst we continue to operate in a challenging macro environment, this does not change our focus.
"We have a resilient business, a talented team and are building a market-leading technology suite.
"We are confident that our investments and innovations put the group in a position of strength to capture market share as and when the market returns to growth."
At 0929 GMT, shares in SThree were down 2.14% at 389.5p.
Reporting by Josh White for Sharecast.com.
