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World – Randstad sees European business ‘accelerating’ in Q2

30 July 2015

Randstad (RAND: NV), the second largest staffing firm in the world, today reported revenue for the second quarter quarter ending 30 June 2015 of €4.8 billion, an increase of 7% on an organic basis compared with €4.3 billion a year ago.

The financial results for the second quarter was broken down as follows:

  Q2 2015 Q2 2014 Change (CC) Organic Change
Revenue € 4,815.8 million €4,268.1 million +12.8% +6.7%
Gross Profit € 902.9 million €786.7 million +14.7% +7.0%
EBITA € 215.2million € 174.1million +23.6% +16.0%

Currency effects had a positive impact on gross profit of €56 million, an organic increase of 6.7% when compared with Q2 2014. Gross margin was 18.7% compared to 18.4% in Q2 2014.

Underlying EBITA increased organically by 16.0% to €215.2 million and the EBITA margin reached 4.5%, up from 4.1% in Q2 2014.

“Our solid results confirm that we are on track to deliver on our ambition, driven by the strong execution of our 29,000 colleagues across the globe", says Randstad CEO Jacques van den Broek. "Growth in Europe is accelerating and our US business continues to do well. I am proud of the market outperformance by our people in many of our operations. Furthermore, we see continued growth in permanent placements and also in managed services and recruitment process outsourcing, both part of Randstad Sourceright. Looking at the progress we have made in the past 12 months, I am confident we can do even better in the future."

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

  Q2 2015 Q2 2014 Change (CC) Organic Change
North America €1,173.4 million €910.9 million +29.0% +5.0%
France €746.1 million €719.3 million +4.0% +4.0%
Netherlands €751.2 million €677.8 million +11.0% +15.0%
Germany €479.9 million €479.4 million +0.0% +0.0%
Belgium & Luxembourg €328.9 million €311.0 million +6.0% +6.0%
Iberia €294.8 million €270.5 million +9.0% +8.0%
UK €230.3 million €203.8 million +13.0% +0.0%
Other Europe €390.8 million €342.1 million +14.0% +9.0%
Rest of World €420.4 million €353.3 million +19.0% +12.0%
Total Revenue €4,815.8 million €4,268.1 million +13.0% +7.0%

Randstad’s combined US businesses grew by 6% in Q2, while revenue from Canada declined by 2% compared with last year. Randstad Sourceright North America turned in another solid quarterly performance with net fees growing by 25%. Spend under management within MSP was up 49% due to the expansion of existing programmes and significant new customer wins.

In France, revenue grew by 4% ahead of the overall market. Staffing and Inhouse revenue increased 4% (Q1 2015: down 1%). Randstad’s Professionals business was up 2%, driven by healthcare. Permanent fees were up 6% compared to last year (Q1 2015: up 15%). EBITA margin increased to 5.6%, compared to 5.4% last year.

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 15%. Revenue from Yacht, Randstad’s combined Dutch professionals business, was up 12%.

In Germany, revenue per working day was flat year-on-year. The continued decline in volume has been partially offset by a favourable price increase of 4%, resulting from Collective Labour Agreement-related price increases and equal pay adjustments. In the quarter, a € 3.8 million restructuring charge was taken in Germany.

In Belgium & Luxembourg, revenue per working day was up 6%, driven by the Staffing/Inhouse business, which grew 7%. The Professionals business was down 3%. Overall gross profit increased 5%.

Growth across Iberia was driven by Spain, which reported revenue up by 14% driven by Randstad’s focus on permanent placements and Professionals. Revenue from Portugal declined by 4%, as a result of a focus on client profitability.

Revenue per working day in the UK was flat compared to the prior year, while gross profit was up 5% (Q1 2015: up 5%), emphasizing continued focus on both profitable growth and perm placements. Overall perm fees grew by 5% year-on-year. Construction/Engineering again experienced double-digit growth. EBITA margin improved to 2.0%.

Revenue from Italy grew by 16%, with Poland achieving growth of 2%. Revenue growth in Randstad’s Swiss business slowed to 2%, ahead of a difficult market. In the Nordics, revenue grew by 7%.

Good results were seen across Asia Pacific. In Japan revenue grew by 6%. Revenue in Australia grew by 16% while China grew by 20%. Randstad’s business in India continued to pick up, growing by 14%.

Latin America grew by 16% (Q1 2015: up 18%), driven by Argentina and Chile.

Randstad operates three primary business segment: Staffing, Professionals, and Inhouse Services, with a breakdown of revenue in Q2 as follows: 

  Q2 2015 Q2 2014 Change (CC) Organic Change
Staffing €2,800.3 million €2,524.9  million +10.9% +6.0%
Inhouse Services €1,055.9 million €896.6 million +17.8% +12.0%
Professionals €959.6 million €846.6 million +13.3% +3.0%

Revenue grew by 6.7% in Q2, and in June it was up more than 6%. Based on volume trends, the growth in July, so far, appears to be at least in line with the quarter average. For Q3 Randstad continue to expect a significant YoY FX impact at the current levels. Sequentially, there should be a slight seasonal drop in gross margin in Q3, as usual, due to more holiday work although there is no significant working day impact in Q3.

In trading today, the company’s share price fell by 2.2% to €60.38, an increase of 62.7% compared with a year ago. Based on its current share price, the company has a market value of €11 billion.