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View All NewsRandstad revenue up 3% in Q3; North American revenue accelerates, Europe slows
Randstad NV reported topline revenue accelerated in North America and its “rest of the world” segment in the third quarter. However, it noted a slowdown in European revenue.
Overall, third-quarter revenue rose 3% on an organic basis — which excludes the impact of acquisitions, divestitures and currency — at the Netherlands-based company, which is among the largest staffing firms in the world.
| (€millions) | Q3 2018 | Q3 2017 | % change | % organic change | Q3 2018 (US$millions) |
| Revenue | € 6,006 | € 5,872 | 2% | 3% | $6,968 |
| Gross profit | € 1,191 | € 1,178 | 1% | 2% | $1,382 |
| Gross margin | 19.8% | 20.1% | |||
| Operating profit | € 254 | € 227 | 12% | - | $295 |
| Net income | € 190 | € 165 | 15% | - | $220 |
North American revenue rose 3% year over year on an organic basis in the third quarter, an increase compared to year-over-year growth of 2% in the second quarter and 1% in the first quarter.
However, French revenue was down 1% on an organic basis in the third quarter, and Germany was down 2% on an organic basis.
Revenue in the company’s “rest of the world” segment rose 12% on an organic basis in the third quarter. That compares to 11% in the second quarter and flat growth in the first. The segment includes Australia, New Zealand, Japan, China and Latin America.
Revenue at RPO and MSP division Randstad Sourceright, included in the company’s “global business” segment, rose in the high single-digits on an organic basis in the third quarter. However, Monster revenue, also in the global business segment, fell 15% organically in the third quarter, an improvement over the decline of 16% in the second.
Revenue by geography
| (€millions) | Q3 2018 | Q3 2017 | % change | % organic change | Q3 2018 (US$millions) |
| North America | € 1,057 | € 1,015 | 4% | 3% | $1,226 |
| Netherlands | € 862 | € 830 | 4% | 4% | $1,000 |
| France | € 934 | € 939 | -1% | -1% | $1,084 |
| Germany | € 610 | € 619 | -1% | -2% | $708 |
| Belgium & Luxembourg | € 440 | € 421 | 5% | 3% | $510 |
| Italy | € 403 | € 378 | 7% | 7% | $468 |
| Iberia | € 380 | € 374 | 2% | 1% | $441 |
| Other European countries | € 547 | € 541 | 1% | 3% | $635 |
| Rest of the world | € 491 | € 473 | 4% | 12% | $570 |
| Global businesses | € 282 | € 282 | 0% | 0% | $327 |
Looking at just the US, revenue was up 4% on an organic basis with staffing/inhouse served revenue rising by 5% and professionals revenue edging up 1%. Canadian revenue rose 2%.
Revenue by business line
| (€millions) | Q3 2018 | Q3 2017 | % change | % organic change | Q3 2018 (US$millions) |
| Staffing | € 3,160 | € 3,106 | 2% | 1% | $3,666 |
| Inhouse Services | € 1,330 | € 1,328 | 0% | 5% | $1,543 |
| Professionals | € 1,234 | € 1,156 | 7% | 6% | $1,432 |
| Global businesses | € 282 | € 282 | 0% | 0% | $327 |
Third-quarter perm fees rose by 13% in Europe (down from 17% growth in the second quarter); perm fees in North America rose 10%, compared to an increase of 6% in the second quarter.
Gross margin narrowed in the third quarter. Temporary staffing had a negative effect of 0.2%, primarily driven by adverse mix effects and changes in French tax law. Permanent placements had a positive effect of 0.2%, while HRS/Monster had a negative effect of 0.2%.
Quote
“We further improved our margin and strong free cash flow conversion in Q3,” said CEO Jacques van den Broek. “Our organic sales growth was 3%, reflecting accelerating sales growth in North America and rest of the world, but slowing activity in Europe [was] in line with recent macro trends.”
Guidance
Revenue growth in September and the trend of volumes in early October indicate a continuation of the third-quarter growth rate of 2.7%. However, fourth-quarter gross margin is expected to be modestly lower sequentially.
Share price and market cap
Shares in Randstad closed down 2.42% to €42.83 in Amsterdam.