Randstad (RAND: NV), the second largest staffing firm in the world, today reported revenue for the first quarter ending 31 March 2015 of €4.4 billion, an increase of 5.6% on an organic basis compared with €4 billion a year ago.

Revenue growth moderated throughout the quarter, easing from 6.5% in January to 4.3% in March.

Currency effects had a positive impact on gross profit of €44.9 million, an organic increase of 6.7% when compared with Q1 2014. Gross margin was 18.4% compared to 18.1% in Q1 2014.

Underlying EBITA increased organically by 19.4% to €153.1 million and the EBITA margin reached 3.5%, up from 3.1% in Q1 2014.

Jacques van den Broek, CEO of Randstad, commented: “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. 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.”

Randstad achieved revenue growth across most of its major markets; with revenue in France flat on an organic basis, indicating some improvement in that challenging market.  

Randstad’s combined US businesses grew by 6% in Q1, while revenue from Canada was up by 1% compared with last year. Randstad Sourceright North America turned in another solid quarterly performance with revenue growing by 21%. Spend under management within MSP was up 39% due to the expansion of existing programmes and significant new customer wins.

In France revenue was flat, year-on-year, though the company claims the gap to overall market growth is closing. According to the latest data from Prism’Emploi, the French Association of Employment Agencies, the French staffing market grew by 1.2% in January and 3.7% in February. Permanent fees were up by 15% compared with last year. Revenue from the combined Staffing and Inhouse businesses was 1% below last year, driven by a further significant deterioration in the construction sector, which was only partially offset by higher demand in the automotive sector.

Overall permanent fee growth in the Netherlands increased by 21%, with the region’s combined staffing brands and its Tempo-Team subsidiary reporting revenue growth of 8% and 9%, respectively.

Revenue from Yacht, Randstad’s combined Dutch professionals business, was up 19%. In line with the company’s earlier announcement, Randstad took a €9 million charge for the restructuring of their Dutch Professionals operations in Q1 2015. This is in addition to an earlier restructure of the Netherlands back and head office, which was completed in Q4 2014.

In Germany the continued decline in volume has been partially offset by a favourable price increase of 2%, resulting from Collective Labour Agreement-related price increases and equal pay adjustments. The pressure on gross margin persists in the country’s Staffing and Inhouse business, with the 13-week average calculation rule on sickness and holidays having a clear impact.

In Belgium & Luxembourg the gap to the market has narrowed, with gross profit up by 9%. Inhouse Services saw revenue growth of 8%, while Staffing was up by 5%. The region’s Professionals business grew by 13%, with permanent fees up 20% against the same quarter last year.

Growth across Iberia was driven by Spain, which reported revenue up by 16% driven by Randstad’s focus on permanent placements and Professionals. Portugal achieved more moderate revenue growth of 4%, which was led by the manufacturing and call centre segments.

Permanent fees increased by 15% across the UK during Q1 2015 with the construction and engineering segments experiencing strong growth, as did most other business lines. After remaining under pressure for some time, the finance business returned to growth during the quarter.

Revenue from Italy grew by 12%, with Poland achieving growth of 16%. In Switzerland, despite challenging market conditions, revenue growth of 9% was reported, while in the Nordics revenue grew by 7%, compared with last year.

In Japan revenue grew by 2%, with the business benefitting last year from the boost created by the VAT increase. Revenue in Australia grew by 21% with solid contributions from both Professionals and Staffing. China grew by 11%, impacted by the comparison base; while Latin America grew by 18%, with solid contributions from Argentina and Brazil.  

Randstad operates three primary business segment: Staffing, Professionals, and Inhouse Services, with a breakdown of revenue in Q1 as follows: 

Looking forward, and following a slowdown in revenue growth to 4.3% in March, the company advised that the volume trend in April looks a touch better than the previous month. The company expects a significant favourable FX impact on reported figures in Q2. 

Randstad expects operating expenses to be up moderately, on an organic basis, in Q2 as there will continue to be targeted investments in headcount in selected growth markets.

In trading today, the company’s share price fell by 3.4% to €52.92, an increase of 29.1% compared with a year ago. Based on its current share price, the company has a market value of €9.9 billion.