Recruitment firm SThree reported a significant decline in profits for the first half of 2026 amid a continuing industry downturn, but its chief executive expressed optimism about a recovery in business activity. Between December 2025 and May 2026, the company’s net fee income fell 7 percent to £147.7 million from £159.1 million in the same period last year. Pre-tax profits dropped sharply by 73 percent to £2.7 million, down from £10.1 million in the previous year.

The decline in profitability was attributed to reduced fee income, alongside one-time expenses tied to a “cost optimisation programme.” This initiative included a 15 percent reduction in the company’s workforce over the past 12 months as part of efforts to align costs with the current market environment.

SThree’s chief executive, Timo Lehne, highlighted signs of improvement despite the challenging conditions that have affected the entire recruitment sector. Global economic factors such as trade conflicts, geopolitical instability, increased employment taxes, and the ongoing cost of living crises have weighed heavily on demand over the last four years. Nonetheless, Lehne noted that six out of the firm’s eleven operating countries have seen year-on-year growth in new business activity, suggesting a tentative upturn.

“We don’t know exactly where the world will go, but I would say the worst is now behind us,” Lehne said, forecasting a full-year pre-tax profit of around £10 million for 2026. This outlook aligns with similar cautiously optimistic remarks made by other leaders in the recruitment industry, who have reported gradual recovery in client activity amid improving market conditions.

SThree’s shares closed slightly lower by 0.5 percent at 214 pence following the earnings announcement.