Recruiter SThree's half-year profit plunges as AI, war weigh on hiring
International recruitment firm SThree has reported a sharp fall in profits as hiring activity slowed across Europe, with Germany emerging as one of its weakest-performing markets due to declining demand for skilled workers.
The company said its half-year like-for-like pre-tax profit dropped 75% to £2.7 million, compared with £10.1 million a year earlier. Employers have become more cautious about recruiting new staff, while many workers are delaying job changes because of economic uncertainty and rapid changes brought by artificial intelligence (AI).
Germany was particularly affected, with SThree reporting a 14% decline in net fees as demand for software development and other technology-related jobs weakened. In contrast, the United States performed better, posting a 12% increase in net fees, highlighting the different pace of hiring across global markets.
The company said geopolitical tensions, including the ongoing conflict involving Iran, along with businesses adapting to AI-driven changes, have made many employers reluctant to expand their workforce. These factors have reduced recruitment activity across several European markets.
Despite the disappointing results, SThree maintained its full-year profit forecast of around £10 million, a figure that exceeded analysts' expectations. However, investors reacted negatively to the update, sending the company's shares down by nearly 5% as concerns over the outlook for the recruitment industry persisted.