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Netherlands – USG People Q1 “better than expected”

April 27 2012

USG People (USG:AEX), the fourth largest staffing firm in Europe, said its first quarter results were better than expected as cost cuts have improved profitability. However, revenue declined by -9% to €705.1 from €775.8 million in the first quarter of 2012 as turnover dropped sharply across Europe and demand in the industrial sector deteriorated. The firm refrained from issuing guidance on the development of profit in 2012 due to “current market uncertainty.”

The news comes after rival firm Randstad yesterday published its Q1 results which were also impacted by slowing activity in Europe. 

Gross profit in the first quarter decreased to €152.6 million from €165.4 million, a reduction of -8%. Despite this, the gross margin improved to 21.6% from 21.3%.

In the first quarter, operating income was up from €9.8 million to €14.8 million as operating expenses declined by -11% compared to Q1 2011. Net income was also up to €5.7 million against a loss of €0.7 million in Q1 2011.

Across Europe, revenue declined particularly in Germany and Italy where sales were down -13% compared to Q1 2011 to €62.7 million and €28.9 million respectively.

In the Netherlands, the firm’s largest market, revenue was also down by -8% organically from €295.3 million to €272.5 million. In Belgium and Luxembourg, revenue declined by -9% to €154.7 million while in France sales were lower by -10% amounting to €114.2 million. Spain saw a relatively marginal decline of -2% as revenue reached €44 million while in other countries, revenue fell -16% to €28.1 million.

The firm’s General Staffing division, which realises a large part of revenue from clients in the industrial sector, saw revenues drop by -10% to €401.7 million from €447.4 million a year ago. In the first quarter, Specialist Staffing revenue also fell -10% to €246.8 million from €274.3 million. The Professionals segment, however, increased revenue by +4% to €56.6 million in the first quarter from €54.1 million.

Rob Zandbergen, CEO of USG People, said the firm had implemented a variety of improvements in the last year and remained confident about the result. “Pricing remained stable and the level of expenses continued to improve, resulting in a higher rate of conversion. The improvements stem from our focus on an effective execution of our services, which will be specifically geared to the sales process in the coming quarters.”

“As part of our strategic plan of expanding our high-value Professionals activities we recently announced the acquisition of Control Finance in the Netherlands. Control Finance provides a stable and sound platform for us to further shape and expand our activities in the financial talent segment of the market. Furthermore Secretary Plus and Professionals have commenced the proposed rollout and organic growth.”

USG People provides staffing, secondment, Human Resources (HR) and customer care services and operates across three segments: General Staffing, which includes Staffing, secondment, recruitment and selection and pool management for call centres, the transport, healthcare and technical sectors. Specialist Staffing, which focuses on administrative, commercial, financial, medical, management support, HR, multilingual and technical staff; and Professionals, which focuses on qualified and specialist staff in communication and marketing, legal, financial, HR, IT and technical.

The firm is the second biggest staffing firm in the Netherlands after Randstad, according to Staffing Industry Analysts.

After announcing its Q1 results this morning, the company’s share price surged +11.35% to €7.12, down -46 from a year ago but +58 above the 52-week low of €4.50 set on 25 November 2011. The firm has a market capitalisation of €501.3 million. 

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