* H1 underlying gross profit up 2 pct
* UK, Ireland pulled down by Brexit, public sector reform
* Continental Europe, U.S bright spots (Adds CEO comments, details, updates shares)
By Noor Zainab Hussain
June 16 (Reuters) - British recruiting firm SThree said on Friday its energy business was less reliant on the oil and gas sector that has been hit by low energy prices, and it was putting less focus on investment banking where Brexit led to a hiring freeze.
The company that places people with financial, energy, banking and pharmaceutical firms posted a 2 percent rise in first-half gross profit to 134.3 million pounds ($171.5 million), helped by strong demand for temporary workers in Europe and the United States, its main markets.
Gross profit is a key indicator for staffing firms as it represents total fees earned from all recruitment work.
Performance in Britain and Ireland was held back by a slower market after Britain’s vote to leave the European Union and new IR35 tax rules affecting contractors working for public sector bodies.
“A number of contractors, when their contract is coming up for renewal, are deciding to see if they can find jobs in the private sector,” CEO Gary Elden told analysts, adding this hit more than 3 million pounds of gross profit in the past two years.
Overall, SThree, which now generates 80 percent of its gross profit outside Britain, said gross profit from contract hiring rose 8 percent, with growth in engineering, life sciences and energy businesses.
Elden said SThree’s work in the energy business was changing. “Our renewable business, power business is seeing some progression there. So, we’re less reliant now on oil and gas and less reliant on upstream,” he said.
He said work in the oil and gas industry in Britain and Africa had disappeared, but he said there was some pick up in places like the U.S. state of Texas due to shale projects.
Elden said the focus was also changing in the financial sector, where he said nearly 80 percent of investment banks froze hiring last year.
“We’ve shifted out business to try and be less reliant on investment banks,” he said, adding SThree was seeing improvements in areas such as fintech and financial services, while investment banking was improving “slightly.”
Shares in the company were up 5.2 percent at 319.50 pence at 0914 GMT.
$1 = 0.7831 pounds Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Edmund Blair