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Randstad revenue slips 14% on falling demand

February 26 2009

Randstad Holding NV reported a 14% year-over-year decline in fourth quarter revenue to euro3.96 billion (US$5.58 billion) on a pro forma basis amid falling demand that continued into January.

"Having grown in the first half of 2008, the unprecedented fall in demand in Q4 2008 and January 2009 reflects the major economic difficulties our clients currently face," said CEO Ben Noteboom.

Revenue per working day fell 24% in January, but the trend seems to have stabilized in the first weeks of February, the Netherlands-based staffing company reported. Still, visibility remains low, it said.

Fourth-quarter North American revenue fell 11% to euro472.9 million (US$666.7 million) on a pro forma basis. It fell 18% on an organic basis, which excludes the effects of currency, acquisitions and disposals.

Randstad said North American information technology, healthcare and engineering staffing kept up with good performance. However, finance and accounting and legal staffing posted declines. Direct hire fees in the U.S. fell 33%.

Fourth-quarter pro forma revenue fell in all of Randstad's geographic regions with the exception of its rest-of-the-world category, which rose 5% (11% on an organic basis). The Iberia region's pro forma fourth-quarter revenue fell the most, down 21% on an organic basis. It was followed by France, down 19%; North America, down 18%; and the United Kingdom, down 16% -- all on an organic basis.

Pro forma fourth-quarter gross margin narrowed to 20.7% from 21.0% in the year-ago period.

Randstad's pro forma reporting includes treating its acquisition of Vedior, effective July 2008, as if the companies had been combined in both 2008 and 2007. Randstad had ranked as the world's third-largest staffing firm in 2007 and Vedior had ranked as fourth-largest. Randstad, however, reported its fourth-quarter net loss and full-year net income on a non pro forma basis.

The company's fourth-quarter net loss was euro231.4 million (US$326.2 million). The company took a goodwill impairment of euro561.6 million (US$791.7 million) in the fourth quarter over its acquisition of Vedior among other factors.

Randstad also said it took a restructuring charge of euro31 million (US$43.7 million). The company plans another restructuring charge of euro25 million in the first quarter.

Randstad said it had 5,233 branches at the end of the fourth quarter, down 3% year-over-year. In addition, it has 4% fewer full-time equivalents on average (33,390) in the fourth quarter compared with the same period a year ago.

Full-year revenue on a pro forma basis was euro17.18 billion (US$24.22 billion). Gross margin was unchanged at 20.6%.

Full-year net income, not on a pro forma basis, was euro18.4 million (US$25.9 million). That compared to net income of euro384.9 million in 2007.

The company is planning no dividend.

Randstad Holding NV
For the fourth quarter ended Dec. 31, 2008, compared with the same period in the previous year. The revenue number is on a pro forma basis as if Randstad and Vedior had been combined throughout both periods.
Revenue: euro3.96 billion (US$5.58 billion), -14%
Net loss: euro231.4 million (US$326.2 million) vs. net income of euro118.5 million

For the full year Dec. 31, 2008, compared with the previous year. The revenue number is on a pro forma basis as if Randstad and Vedior had been combined throughout both periods.
Revenue: euro17.18 billion (US$24.22 billion), -3%
Net income: euro18.4 million (US$25.9 million), -95.2%

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