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Randstad Q1 revenue up 6% on organic basis

April 30, 2015

Randstad Holding nv, the world’s second-largest staffing firm and the third-largest in the US, reported first-quarter revenue rose 6% year over year to €4.43 billion (US$4.81 billion) on an organic basis, which excludes the impact of currencies, acquisitions, disposals and reclassifications.

Revenue rose across most of its major markets — including North America — with the exception of France and Germany. North American revenue rose 5% on an organic basis, revenue in France was flat and Germany’s revenue fell 3%.

(€millions) Q1 2015 Q1 2014 % growth % organic growth* Q1 2015 (USD$millions)
Revenue € 4,431.4 € 3,969.7 12% 6% $4,808.1
Gross profit  € 814.8 € 717.3 14% 7% $884.1
Gross margin 18.4% 18.1%      
Operating profit € 103.7 € 82.1 26% - $112.5
Net income € 59.5 € 54.9 8% - $64.6

Quote

“The gradual recovery in Europe is reflected in our results, while we have also closed the gap to the market in both the Netherlands and France,” said CEO Jacques van den Broek. “This is the result of the drive and commitment of our people and the successful execution of Activity-Based Field Steering. I want to congratulate all my colleagues on taking this step toward achieving our ambitions: becoming a strategic partner for our clients, resulting in profitable growth across our markets.”

Revenue by geography

(€millions) Q1 2015 Q1 2014 % growth % organic growth* Q1 2015 (USD$millions)
North America € 1,074.7 € 850.9 26% 5% $1,166.1
France € 619.4 € 621.2 0% 0% $672.1
Netherlands € 711.0 € 647.9 10% 10% $771.4
Germany € 460.1 € 475.1 -3% -3% $499.2
Belgium & Luxembourg € 313.2 € 294.0 7% 7% $339.8
United Kingdom € 224.3 € 197.1 14% 3% $243.4
Iberia € 270.7 € 242.7 12% 12% $293.7
Other European countries € 352.5 € 309.7 14% 12% $382.5
Rest of the world € 405.5 € 331.1 22% 12% $440.0

Revenue by business line

(€millions) Q1 2015 Q1 2014 % growth % organic growth* Q1 2015 (USD$millions)
Staffing € 2,570.4 € 2,352.4 9% 5% $2,788.9
Inhouse Services € 944.4 € 809.9 17% 11% $1,024.7
Professionals € 916.6 € 807.4 14% 3% $994.5

* Organic change is measured excluding the impact of currencies, acquisitions, disposals and reclassifications. For revenue, the organic change has been adjusted for the number of working days. When calculating growth, the USG activities are included on a pro forma basis and there not excluded as acquisition effect.

North America 

  • Organic revenue growth per working day was 5% above last year. Reported revenue rose 26%. Combined US businesses rose 6%, while Canada grew 1%. The gross margin was up due to mix impact, driven by 9% growth in perm fees. Gross profit growth in the quarter was 10%.
  • Combined US Staffing and Inhouse businesses grew by 8% per working day in the first quarter. Overall gross profit grew by 13%, driven by a continued solid growth in perm fees of 21%.
  • US Professionals business booked 6% gross profit growth in the quarter, while revenues edged down 1%.
  • The IT business continued to improve in terms of gross profit development. Perm fees were up 4%.
  • Randstad Sourceright North America’s revenue rose 21%. Spend under management within MSP rose 39% due to expansion of existing programs and significant new customer wins.
  • In Canada, the topline grew 1%, while the market was down mid-single digit. A increase of 2% in Randstad’s professionals business drove the growth, which was offset by a 6% decline in staffing and Inhouse business.
  • EBITA margin for the region increased to 3.5%.from 2.8%. The underlying profitability improved across all business lines.

France

  • Revenue was flat year over year, with the gap to market closing. Perm fees rose 15%.
  • Revenue of the combined Staffing and Inhouse businesses fell 1% from last year’s first quarter. A further significant deterioration in the construction sector drove the decline, which was only partially offset by higher demand in the automotive sector. Inhouse Services revenue rose 15% on new client wins. Staffing was 4% below last year.
  • The professionals business rose 4%, with a solid performance in healthcare.
  • EBITA margin remained stable year over year at 4.1%.

Netherlands

  • Revenue per working day rose 10% compared to last year. Overall perm fee growth increased to 21%.
  • Randstad’s combined staffing organization revenue per working day rose 8% and Tempo-Team rose 9%.
  • Yacht’s revenue, which is now comprised of the combined Dutch professionals business, rose 19%. Randstad took a €9 million charge for the restructuring of its Dutch professionals operation in the quarter.
  • Dutch EBITA margin came in at 6.0%, up from 5.0% last year.

Germany

  • Revenue per working day fell 3%.
  • The pressure on gross margin persists in Staffing and Inhouse businesses, with the 13-week average calculation rule on sickness and holidays having a clear impact.
  • Underlying German EBITA margin fell to 3.4% from 3.9% in Q1 2014.

Belgium & Luxembourg

  • Revenue per working day rose 7%.
  • Inhouse services revenue rose 8%, while staffing was increased 5%. The Professionals business grew 13%, and perm fees were up 20%.
  • EBITA margin improved to 5.4% from 4.9% last year.

Iberia

  • Both revenue and gross profit rose 12%.
  • Spanish revenue rose 16%, with Inhouse growing 32%. Permanent placements rose 57% and professionals rose 87%.
  • In Portugal, revenue rose 4%, led by the manufacturing and call center segments.
  • Overall EBITA margin for Iberia improved to 3.4% in the first quarter from 3.3% in the same period last year.

United Kingdom

  • Revenue per working day rose 3%, while gross profit increased 5%. Overall perm fees rose 15% year over year.
  • Construction/engineering again experienced strong growth, as did most other business lines. Finance returned to growth.
  • EBITA margin increased to 2.1% from 1.8%.

Other European countries

  • Across Other European countries, revenue per working day grew by 12%, driven by double-digit growth in Italy and Poland. Revenue rose 12% in Italy and 16% in Poland.
  • Swiss business grew by 9%, despite challenging market circumstances. In the Nordics, revenue grew by 7%.
  • EBITA margin for the Other European countries reached 2.7% and FTE base was up 12% year over year.

Rest of the world

  • Overall revenue in the rest of the world rose 12% organically.
  • In Japan, revenue rose 2%. Last year, Randstad’s business benefited from the boost created by the VAT increase.
  • Revenue in Australia grew by 21%, with solid contributions from both professionals and staffing.
  • China revenue grew by 11%, impacted by the comparison base.
  • Latin America grew 18%, with contributions from Argentina and Brazil.
  • EBITA margin improved to 1.5%, compared to 0.5% in the same period last year.

Share price and market cap

Shares in Randstad fell 2.74% today to €53.30. The company has a market cap of €9.61 billion, according to Google.