SThree Reports Sharp Drop in Half-Year Profit as AI Shift and Geopolitical Uncertainty Slow Hiring

British recruitment company SThree reported a steep decline in its half-year performance, with like-for-like pretax profit falling by around 75% for the six months ended May 31.

The company said hiring activity remained under pressure as businesses delayed recruitment decisions amid the ongoing Iran conflict and changing workforce demands linked to artificial intelligence. According to SThree, these factors also made job seekers more cautious about changing employers.

Germany, the company's largest market, recorded a 14% decline in net fees. SThree attributed the drop to weaker demand for software development roles as organisations increasingly adopted AI technologies.

In contrast, the United States delivered stronger results, with net fees increasing by 12%, reflecting healthier hiring activity in that market.

Chief Executive Timo Lehne said economic conditions remained uneven because of geopolitical uncertainty while artificial intelligence continued to reshape both client organisations and the recruitment industry.

Pretax profit for the first half of the financial year came in at £2.7 million, compared with £10.1 million during the same period a year earlier. Overall net fees for the period declined 7%.

Despite the weaker first-half performance, SThree maintained its forecast for fiscal 2026 pretax profit of about £10 million, which remains above the average analyst estimate of £8.8 million based on the company's compiled consensus.

The company's shares fell nearly 5% following the results, while UK-listed recruitment firms have generally faced pressure this year amid subdued hiring conditions.