Randstad (RAND: NV) reported today that organic revenue per working day was down 7.3% year-on-year in Q3 2023 resulting in revenue of €6.26 billion.

Reported revenue was down 11% over the year, of which working days had a negative impact of 1.5% while currency effects had a negative effect of 3.3%. M&A positively contributed 0.9%.

Organic revenue was down across all geographical areas with the exception of Asia Pacific, which reported 2% growth.

The group's revenue fall was ‘significantly more down than expected’, according to KBC analysts although good cost control meant that earnings surprised the market on the upside.

In Q3 2023, gross profit amounted to €1.29 billion, down 10% over the year organically. Currency effects had a negative €64 million impact on gross profit compared to Q3 2022.

Underlying EBITA was down 17% year-on-year organically to €273 million. Currency effects had a €15 million negative impact. According to Reuters, this beat the €258 million expected by analysts in a company-provided poll.  

Randstad CFO Jorge Vazquez said in an interview that the profit beat was helped by good management of operating expenses and pricing initiatives.

The staffing giant also flagged a soft jobs market, even as it said cost cuts helped it beat profit expectations in the third quarter.

EBITA margin fell to 4.4% in the quarter compared to 4.8% the year prior.

Sander van ‘t Noordende, CEO of Randstad, said, “We continued to perform resiliently in the third quarter amid the ongoing global macroeconomic challenges. Europe, Latam and Asia-Pacific were our better performing regions, while tough domestic market conditions impacted our performance in North America.”

“I am particularly pleased with how our teams have adapted to the changing conditions in their markets and have been able to maintain margins and robust cashflow generation,” van’t Noordende said. “This has contributed to solid profitability and margin performance, while our balance sheet position remains strong. “

“We made further strategic progress in the period with the launch of Randstad Digital. This is an important step, which positions Randstad as a digital enablement partner for transforming businesses by providing global talent, capacity, and solutions across specialized platforms. We are excited about the growth opportunities in this area,” van’t Noordende added.

Revenue by Geography

Unless otherwise stated, revenue growth below is year-on-year and on an organic basis.

In North America, revenue was down 16%. Permanent fees were down 40% over the year. In Q3 2023, revenue of the combined US businesses was down 15%. US Staffing/Inhouse Services was down 19%. US Professionals revenue was down 11%. In Canada, revenue was down 16%.

In the Netherlands, revenue was down 8%. Overall permanent fees were down 24%. The combined Staffing and Inhouse Services business was down 5%, while the Professionals business was down 26%.

In Germany, revenue per working day was down 9%. Permanent fees were up 29% compared to last year. The combined Staffing/Inhouse Services business was down 10%, while Professionals was down 6%.

In Belgium and Luxembourg, revenue was down 6%. The Staffing/Inhouse Services business was down 7%.

Across other Northern Europe countries, revenue per working day was down 3%. In the Nordics, revenue was down 15%, while in Switzerland, revenue was down 7%. Revenue in the Poland business was up 14%.

In France, revenue was down 3%. Permanent fees were down 6% compared to last year. Staffing/Inhouse Services revenue was down 8%, while the Professionals business was up 8%.

Revenue per working day in Italy was down 2%. Overall permanent fees were up 5%.

In Iberia, revenue per working day was down 2%. Permanent fees were down 8% compared to last year. Staffing/Inhouse Services combined was down 2%. Spain was down 2% while in Portugal revenue was down 1%.

Across other Southern Europe countries, UK & Latin America, revenue per working day was down 9%. In the UK, revenue was down 16%, while in Latin America revenue was up 7%.

Total revenue in the Asia Pacific region was up 2%. In Japan, revenue was up 5%. Revenue in Australia/New Zealand was down 2%, while revenue in China was down 7%. The business in India was up 7%.

Across Global Businesses, total organic revenue growth per working day was down 12%. Enterprise solutions revenue was down 12%, while Monster revenue was down 12%.

Revenue by Category

Total revenues of permanent placements in the revenue categories 'Staffing', 'Inhouse', and 'Professionals', amounted to €139 million in Q3 2023 (Q3 2022: € 187 million). Revenue of recruitment process outsourcing within Global businesses amounted to € 75 million in Q3 2023 (Q3 2022: € 121 million).

“Looking ahead, our markets continue to be defined by three prevailing trends; a scarcity of talent, clients seeking greater levels of support and the rapid proliferation of new technologies,” van’t Noordende said. “We are confident in our ability to capture the growth opportunities in our markets and we are well positioned for growth when market sentiment improves. We will provide a broader update on our strategy at our Capital Markets Day in London on Tuesday 31 October 2023.”

Randstad added that the macroeconomic conditions it experienced in the third quarter have continued in early October, with the year-on-year growth rate of employees working in line with the Q3 2023 year-on-year growth rate.

Q4 2023 gross margin and operating expenses are both expected to be broadly in line sequentially. Tough it added that visibility remains limited.

“We remain cautious and we continue to work with scenario planning,” the group stated. “We will continue to respond quickly and effectively, through our diverse portfolio of services, and operational adaptability provided by our field steering model.”

Randstad shares last traded at €48.49, up 1.25% on the day and 6.11% above its 52-week low of €45.70, set on 31 May 2023. The company has a market cap of €8.81 billion.