Randstad (RAND: NV), the second-largest staffing firm in the world, today reported revenue for the second quarter ending 30 June 2018 of €6.0 billion, an increase of 5% on an organic basis compared with €5.8 billion a year ago.

Second-quarter revenue growth was led by Italy with an organic growth of 10% when compared to the same period last year. Overall, group permanent placement growth accelerated to 14% in the same period.

In Q2 2018, gross profit amounted to €1.2 billion, an organic growth of 3%, impacted by adverse mix effects related to Monster. Currency effects had a negative impact on gross profit of €44 million compared to Q2 2017.

Gross margin fell to 19.8% from 20.4% in the second quarter. Temporary staffing had a negative effect on gross margin, primarily due to adverse mix effects and changes in CICE (Competitiveness and Employment Tax Credit) in France. Permanent placements had a positive effect on gross margin, while HR Solutions/Monster had a negative impact.

Underlying EBITA increased organically by 10% to €283 million. According to Reuters, analysts had expected EBITA to rise just over 5% to €276 million while revenue was expected to increase 3.3% to 6.06 billion euros.

"We delivered a strong operating performance in Q2," CEO Jacques van den Broek said. "Our organic sales growth came in at 5%, offsetting high comparable growth rates in Q2 2017. Our perm growth further accelerated to 14%.”

According to Randstad, the trade dispute between the United States, China and the European Union, is causing uncertainty, but not feeding into Randstad’s business, which is benefiting from strong demand for staffing services globally.

“Most of our clients are still in a good space, very much in need of people,” van den Broek said in an interview. “Then there is the political unrest. Let’s hope that doesn’t mess too much with the economic stability.”

“Randstad Sourceright and the Rest of the world region generated double-digit topline growth and significantly higher profitability,” van den Broek said. “These businesses have further improved our global presence and resilience. All in all, we improved our margin conversion for the group by maintaining the right balance between investing in growth and focus on profitability.”

Van den Broek also commented on Randstad’s digital strategy, “Our digital strategy is making strong progress in laying digital foundations and scaling up best practices around the world. The global roll-out of digital initiatives such as workforce scheduling, data-driven sales and talent engagement is in full swing, with the first showing the most promising results. Wherever I travel and meet our people, I see a lot of excitement on our digital transformation and the positive effects it has on their jobs."

Revenue broken by Geography was as follows for the second quarter

In North America, revenue growth was up 2% when compared to the same period last year. Perm fees grew 6% during the same period. US Staffing/Inhouse Services grew by 5%. US Professionals revenue was down 1%. In Canada, revenue was flat. EBITA margin for the region came in at 5.5%, compared to 6.1% last year, impacted by temporary effects.

In the Netherlands, revenue was up 4%, year-on-year. Perm fees were up 5% while Staffing and Inhouse Services businesses grew 2% with growth still impacted by a strong focus on client profitability. The group’s Professionals business was up 15% during the same period.

In France, revenue growth was 3% year-on-year. The group stated that revenue was impacted by tougher comparables and strikes. Perm fees were up 21% compared to last year. Staffing/Inhouse Services revenue grew 2%. The group’s Professionals business was up 10%, driven by Expectra and healthcare. EBITA margin was 5.2% compared to 6.4% last year, reflecting the adverse impact of the CICE tax credit change and slower growth.

Revenue in Germany was up 6% year-on-year and ahead of market, though still negatively impacted by regulation changes. Perm fees were up 29% compared to last year while Professionals was up 7%. EBITA margin in Germany was 4.6%, compared to 4.2% last year.

In Belgium & Luxembourg, revenue was up 7%, still ahead of the market. Perm fees were up 35% compared to last year. The group’s Professionals business was up 8%. EBITA margin was 6.8%, up from 6.5% last year.

Revenue in Italy grew by 10% compared to the prior year and was impacted by tougher comparables and client profitability focus. Perm fees were up 44% and EBITA margin improved to 6.1%, from 5.8% last year as the group says it continues to balance growth and profitability.

In Iberia, revenue increased 3%, impacted by tougher comparables. Perm fees were up 17% compared to last year. Spain was up 4% while Randstad’s focus on permanent placements (up 18%) continued to pay off. In Portugal, revenue was down 1%. Overall EBITA margin was 5.2% in Q2 2018, compared to 5.1% last year.

Across 'Other European countries', revenue grew 6%, reflecting tougher comparables.

In the UK, revenue was up by 7%, while perm fees were down by 4%. In the Nordics, revenue increased by 4% on an organic basis. Revenue in the group’s Swiss business was up 13% in the same period. Overall EBITA margin for the 'Other European countries' region was 2.4% compared to 2.6% last year.

Overall revenue in the 'Rest of the world' region grew by 11% organically. In Japan, revenue grew 9%. Revenue in Australia/New Zealand grew 7%, while revenue in China grew by 7%.

Revenue in India was up 2%, while in Latin America revenue grew 35%, driven by Argentina and Brazil. Overall EBITA margin in this region was 5.0%, compared to 2.6% last year, primarily driven by a strong profitability increase in Japan and Australia.

“We achieved record earnings in Japan, Singapore and China,” the group stated.

Revenue by business line was broken down as follows.

For the group’s Global Businesses division (which includes job positioning and résumé services on digital platforms, MSP, RPO and outplacement) revenue was up 3% on an organic basis. Randstad Sourceright continued to deliver double-digit revenue growth, however Monster sales growth was down significantly by 16%. The company stated that Monster’s talent engine was experiencing increased usage within Randstad and that it was currently working on new business models. EBITA margin for the Global Businesses division came in at 0.8% compared to -2.3% last year, reflecting improved profitability in both Sourceright and Monster.

In June 2018, revenue grew at a similar pace as for the whole of the second quarter and Randstad said the development of volumes in early July indicates a continuation of the Q2 growth rate.

According to Randstad, Q3 2018 gross margin is expected to be slightly lower sequentially given seasonality. For Q3 2018, the group expects broadly stable operating expenses sequentially and announced a positive 0.3 working day impact in Q3 2018.

The group also posted half-year figures with revenue up 2% to €11.7 billion when compared to the same period last year.

As of last trade, Randstad Holding traded at €53.24, up 4.39% on the day and 10.69% above the 52-week low of €48.10 set on 29 August 2017. Based on its current share price the company has a market cap value of €9.23 billion.