Recruiter SThree upbeat on outlook after first-half profit surge

(Reuters) - Recruitment company SThree on Monday forecast annual earnings ahead of current market estimates after first-half profit more than doubled and said the pandemic was driving more employers to consider adopting a hybrid work model.

The group said it was seeing the momentum from the first half carry on into the second and there was strong placement activity and contractor retention.

SThree, which provides recruitment services for permanent and contractor jobs in around 16 countries, also said remote and hybrid work has opened up a wider talent pool for employers.

Chief Executive Mark Dorman told Reuters that SThree's clients were thinking carefully about what hybrid means for them, including what work can be done in office physically or remotely.

"We're not seeing a big move to have international remote working as a norm, certainly on the edges that might happen, but its mostly flexibility as to where people can live regionally," Dorman added.

Recruitment companies around the world were hammered last year as the pandemic brought new hiring almost to a halt. But a ramp-up in vaccinations and re-opening of some economies have started encouraging many companies to resume taking on staff.

Pandemic-led restrictions have changed the way people work and several companies, such as travel company TUI UK and accounting firm KPMG have announced moves to embrace flexible working on a permanent basis.

SThree, which is focused on recruitment in science, technology, engineering and mathematics, reported a 106% jump in adjusted operating profit for the six months to May 31 to 28.1 million pounds ($38.70 million) compared with 2020. Profit was also higher than 2019.

For the full-year, SThree expects to perform ahead of current market consensus, which, on average, estimate net fees of 332.4 million pounds and underlying profit before tax of 45.4 million pounds.

The group's shares were down more than 2% in line with Monday's broad market sell-off on fears about the strength of the economic recovery.

Liberum analysts, which raised their expectation for annual profit, said the estimates were "cautiously set, allowing for contractors taking holidays as we emerge out of lockdown."

SThree's upbeat outlook followed similar expectations from peers PageGroup, Robert Walters and Hays, which have all boosted their forecast due to a hiring surge in June.

($1 = 0.7261 pounds)

(Reporting by Yadarisa Shabong and Indranil Sarkar in Bengaluru; Editing by Rashmi Aich and Jane Merriman)

By Yadarisa Shabong