Randstad (RAND: NV), the world’s second largest staffing firm, today reported revenue for the first quarter ending 31 March 2017 of €5.5 billion, an increase of 6.4% on an organic basis compared with €4.7 billion a year ago.

The financial results for the first quarter were broken down as follows:

Randstad managed to improve gross margin strongly from 18.4% in Q1 2016 to 20.4% in Q1 2017.

For Q1 2017 revenue, M&A contributed 8.5% while working days had a positive effect of 2.4%. Underlying EBITA increased organically by 16% to € 209 million. Currency effects had a positive impact of € 1 million, year-on-year.

"We started the year on a positive note, achieving sound organic sales growth and an acceleration in perm placement growth," Randstad CEO Jacques van den Broek said.

"Momentum in Europe remained favourable and our North American business continues to grow. We are satisfied with the progress of our recent acquisitions and remain very excited about their future contribution to the Group. I would like to welcome our new colleagues who joined Randstad through the finalization of the acquisitions of Ausy and BMC. Meanwhile, we are taking the next steps in our digital strategy to enhance the implementation of technology in many of our processes. This enables us to offer clients and candidates tailor-made data-driven insights and to focus on where we are at our best: making the personal connection," van den Broek said.

Randstad noted that as a result of acquisitions and changes in the governance and managerial reporting structure of the group, the external (primary) segmentation (of results) has changed as of Q1 2017; comparative figures for prior periods have been adjusted accordingly. The main changes are the creation of a new segment called Global Businesses consisting of Monster, Randstad Sourceright (RSR), RiseSmart and twago.

Italy will be reported as a separate segment due to increasing size and inclusion of the UK in the segment ‘Rest of Europe’ due to limited size. External (secondary) segmentation on revenue categories now also shows Global Businesses next to Staffing, Inhouse Services and Professionals..

Revenue by Geography

Randstad’s revenue growth was fuelled by improvement in its European businesses.

In North America, revenue per working day increased by 1%, compared to last year, on an organic basis. Permanent placement fees were up 6%, y-o-y. Growth in the US remained flat, while Canada grew by 6%.

In Europe, revenue per working day grew by 8% organically.  In the Netherlands, revenue was up 1%, over the year, organically, while permanent placement fee growth was 45%.

Topline growth in France amounted to 9%, organically and y-o-y with perm fee growth improving by 37% on the year.

Germany was up 9% on an organic basis, while sales growth in Belgium grew by 10% organically. Revenues in Iberia were up by 8% with perm fees in Spain up by 24%. Meanwhile, Italy (pro forma, including Obiettivo Lavoro) rose by 23% on an organic basis.

Across 'Other European countries', revenue grew by 5%, organically. In the UK, revenue was down by 4% (organic) while perm fees dropped by 6%, over the year. In the Nordics, revenue increased by 4% and the company reports that the Proffice integration is well on track. Revenue in the group’s Swiss business was up 21%, y-o-y and organically. In Poland, sales growth came in at 9% compared to last year, on an organic basis.

In the 'Rest of the world' region, revenue increased 9% organically, compared to the previous year. Australia & New Zealand rose by 12% and Japan increased by 7%, organically and y-o-y. Revenue in China grew 17% y-o-y, and organically while business in India grew 2% on the same basis. Latin America revenue grew 12% (organic and y-o-y) driven by Argentina.

Revenue by business line is as follows:

“For Q2 2017, we expect a moderate increase in underlying operating expenses sequentially, mainly driven by extra marketing investments for Monster,” van den Broek said. “There will be an adverse 1.4 working day impact in Q2 2017, as Easter falls in April this year.”

“Following our acquisition path in 2016, we will now first focus on harnessing the full potential of these deals. This process is well on track. We continue to expect M&A activity to be limited in 2017.”

In trading today Randstad Holding traded at €55.77, down 0.75% on the day and 4.52% below its 52-week high of €58.41, set on 14 February 2017. Based on its current share price the company has a market value of €10.30 billion.