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Netherlands – Domestic market proves challenging for USG People in Q3

31 October 2014

Dutch staffing firm USG People (USG: NL) reported revenue of €623.8 million for the third quarter ending 30 September 2014, an increase of +4.1% from €599.4 million during the same period last year.

Gross profit for the quarter rose by +1% to €128.8 million, up from €127.6 million in Q3 2013. Operating income for the period, however, decreased by -4.9% to €24 million, down from €25.3 million a year ago.

Net income for the quarter fell by -46.8% to €13.6 million, down from €25.6 million last year. During the third quarter last year USG People reported net income of €14.5 million from discontinued operations. This year the company reported a loss of €504,000 from discontinued operations.  

Rob Zandenbergen, CEO of USG Group, commented: “We achieved a robust result for the third quarter. Revenue per working day grew by +5% and the EBITA margin rose to 4.6%. The profit margin is evolving towards our strategic target. Revenue growth weakened a little during the third quarter. Expenses were reduced further in the third quarter and were €4 million lower than last year.”

“Despite the more unpredictable economic growth we expect the recovery in our markets to persist and will continue to focus our attention on further improving profitability and providing the right solutions to facilitate growth [for] our clients as effectively as possible,” he added.   

The acceleration in revenue growth reported during the second quarter (+6%) did not continue into the third quarter as a result of the tailing-off of a number of large non-renewed contracts in the company’s Start Business. While the company won several large contracts recently, revenue will not be realised until later in the year.

Broken down geographically, revenue from the Netherlands increased by +1% on an organic basis to €254.7 million, up from €252.7 million last year. According to the latest figures from the Dutch Federation of Employment Agencies (ABU) revenue from the staffing industry across the Netherlands increased, year-on-year, by +8% in July, +7% in August and +9% in September. Yesterday, Randstad reporting organic growth of +4% in the Netherlands during Q3, compared with last year.   

Organic growth of +8% was reported in Belgium, which increased to €167.3 million, up from €155.3 million a year ago. France reported organic growth of +6% to €137.3 million, while revenue from Germany increased by +4% on an organic basis to €62.5 million. USG People’s ‘Other’ region reported organic growth of +25% to €2 million.

Mr Zandbergen added: “Belgium is more predictable, but in Germany the central question is whether or not the government will implement stimulus measures to create more momentum in the economy. However, our German clients remain optimistic.”

USG People’s General Staffing business reported organic revenue growth of +3% to €378.4 million, up from €366.2 million last year. Strong organic revenue growth was reported in Belgium (+10% to €105.6 million) and France (+6% to €136.4 million). However, this was offset by a decline of -4%, on an organic basis, in the Netherlands, which fell to €136.4 million down from €141.9 million a year ago.

The company’s Specialist Staffing business reported organic revenue growth of +6% to €208.9 million, compared with €197.1 million a year ago. Organic growth was reported in the business’ three major markets; the Netherlands (+8% to €94.3 million), Belgium (+5% to €50.5 million), and Germany (+4% to €62.4 million). Revenue declined across the business’ ‘Other’ region by -11%, on an organic basis to €1.7 million, down from €1.9 million in Q3 2013.

The Professionals business achieved organic revenue growth of +1% to €36.5 million, up from €36.1 million last year. Revenue from the Netherlands increased organically by +1% to €24 million, while Belgium reported a decrease of -3% on an organic basis to €11.2 million. The business’ ‘Other’ region reported strong growth of +63% to €1.3 million, up from €800,000 in Q3 2013.

Looking forward the company advised: “The economic recovery is currently following a less predictable course in some of our markets. Our organisation is flexible, enabling us to respond rapidly to changes in the market. We will keep expenses under control and will maintain our focus on commercial and operational excellence and on delivering the right solutions to our clients.”

In trading today, the company’s share price decreased sharply by -11.1% to €7.95, down by -17.3% from a year ago. Based on its current share price, the company has a market value of €646.4 million.