Randstad (RAND: NV), the world’s largest staffing firm, today reported revenue of €5.94 billion with organic revenue per working day down 7.8% for the first quarter ended 31 March 2024.

On a reported basis, revenue was down 8.9% over the year. Working days had a positive impact of 1.1% while currency effects had a positive effect of 0.8%. M&A & other negatively contributed 0.8%.

Gross profit (on an underlying basis, adjusted for integration costs and one-offs) was down 11% on an organic basis, and 12% on a reported basis. Gross margin stood at 20.2%, down from 21.0% the year prior.

Underlying EBITA plummeted by 33% on an organic basis to €177 million. According to Reuters, this was below the €181 million expected by analysts on average in a company-provided poll.

CEO Sander van ‘t Noordende said, “We continued to adapt and respond well in Q1, as market conditions remained challenging. While we performed well in Southern Europe, LatAm and Asia Pacific, we encountered softer conditions than expected in North America and Northern Europe.”

Operating expenses were €1.06 billion, down 7% year-on-year and were adjusted for €39 million of integration costs and one-offs, resulting in underlying operating expenses of €1.02 billion, an organic decrease of €7 million sequentially. The integration costs and one-offs of €39 million mainly reflects restructurings in a few countries and integration costs for recent acquisitions.

Perm fees decreased by 21% over the year. Total revenue of permanent placements amounted to €131 million in Q1 2024. RPO fees decreased by 20%. Revenue of recruitment process outsourcing that the group reports in Enterprise talent solutions amounted to €79 million in Q1 2024 (Q1 2023: € 99 million). Perm and RPO fees made up 16% of gross profit.

Randstad also announced that its 2023 results (including Q1 2023) have been restated due to changes in the external reporting structure. As of Q1 2024, Randstad will report the following four main geographical segments: North America, Northern Europe, Southern Europe, UK & Latin America, and Asia Pacific.

The reporting segments within each of the four main geographical segments remain unchanged from the prior year. The former Global Businesses segment included Enterprise Solutions (Sourceright & RiseSmart) and Monster, Randstad’s online talent recruitment platform. As of 2024, Global Businesses has been included in each of the four main geographical segments.

All Q1 2024 changes noted below are organic and year-on-year unless otherwise noted.

In North America, revenue was down 15% over the year. In Q1 2024, revenue of the combined US businesses was down 15% (Q4 2023: down 16%). US Operational talent solutions was down 11% over the year. US Professional talent solutions was down 22%. US Digital talent solutions was down 16%, while US Enterprise talent solutions was down 16%. In Canada, revenue was down 13%. EBITA margin for the region came in at 2.3% for the quarter, compared to 4.4% last year.

Within Northern Europe, Netherlands revenue was down 7%. The Operational talent solutions was down 7% while the Professional talent solutions was up 1%. EBITA margin in the Netherlands was 4.8%, compared to 6.4% last year.

In Germany, revenue was down 15%. The Operational talent solutions was down 17%, while Professional talent solutions was down 9%. EBITA margin in Germany was 1.2%, compared to 3.1% last year.

In Belgium and Luxembourg, revenue was down 4%. The Operational talent solutions was down 5%, while the Professional talent solutions was down 1%. EBITA margin was 4.5%, compared to 4.6% last year.

Across other Northern European countries, revenue per working day was down 9% (Q4 2023: down 3%). Revenue in Poland was up 7% YoY (Q4 2023: up 7%). In the Nordics, revenue was down 22% YoY (Q4 2023: down 18%), while in Switzerland, revenue was down 12% YoY (Q4 2023: down 11%). EBITA margin for other Northern Europe countries was 2.1% compared to 2.4% last year.

Within Southern Europe, UK & Latin America, in France, revenue was down 5%. Operational talent solutions was down 7%, while the Professional talent solutions was up 2%. EBITA margin was 4.3% compared to 5.6% last year.

Revenue in Italy was down 2%. Operational talent solutions was down 2%. EBITA margin was 7.6%, compared to 7.2% last year. In Iberia, revenue per working day was up 4%. Operational talent solutions was up 3%. Spain was up 6%, while in Portugal revenue was down 6%. EBITA margin was 4.9%, compared to 5.9% last year.

Across other Southern European countries, UK & Latin America, revenue per working day was down 8%. In the UK, revenue was down 12%, while in Latin America revenue was up 6%. EBITA margin for other Southern Europe countries was 1.8% compared to 2.2% last year.

Total revenue in the Asia Pacific region was down 7% organically. In Japan, revenue was up 5%. Japan Operational talent solutions was up 2%. Revenue in Australia/New Zealand was down 16%, while the business in India was up 2%. Overall EBITA margin in this region was 3.9%, compared to 4.4% last year.

As of Q1 2024, the secondary segmentation that was based on Randstad’s revenue concepts Staffing, Inhouse, Professionals and Enterprise has changed to reflect the four specialisations announced at the Capital Markets Day, with Monster shown separately, as follows: Randstad Operational Talent Solutions, Randstad Professional Talent Solutions, Randstad Digital Talent Solutions, Randstad Enterprise Talent Solutions, Monster.

Randstad said the geographical segmental changes better reflect the way management reviews its operating results and makes decisions around resource allocation, while the specialisation segmental changes align Randstad’s reporting with its partner for talent strategy.

Revenue by specialisation

In its outlook, Randstad said Q1 2024 organic revenue per working day decreased by 7.8% over the year.

Challenging market conditions persisted over the course of Q1, resulting in subdued activity levels of clients. These conditions continued into April with volumes sequentially stable from March. 

Q2 2024 gross margin is expected to be broadly in line sequentially. Q2 2024 operating expenses are expected to be modestly higher sequentially. Randstad said it is positioning for growth, guided by its field steering model. The company added that there will be a positive 0.6 working day impact in Q2 2024.

“While we expect macroeconomic uncertainties to remain, we are executing our Partner for Talent Strategy, and investing where appropriate so that we are positioned for growth when the market returns,” van ‘t Noordende said.

Randstad set a new 52-week low during today's trading session when it reached €44.98. Over this period, the share price is down 6.12%. Randstad last traded at €45.43, down 6.33% on the day. The company has a market cap of €8.77 billion.