Randstad (RAND: NV), the world’s largest staffing firm, today reported revenue for the fourth quarter ending 31 December 2020 of €5.7 billion, a decrease of 3.6% on an organic basis compared with €5.9 billion a year ago.

The decrease in Q4 was a significant recovery of revenue decline against the third quarter of 2020 (Q3: -13% organically).

The group also claimed that it had made market share gains in its two largest markets, the US and France.

Gross profit was down 5.7% on an organic basis, an improvement over the 17.6% organic decrease in Q3 2020. The gross margin was impacted by lower permanent placement revenues and the company said that the pricing climate was stable.

Net income was down 15% in the fourth quarter to €167 million while EBITA (adjusted for integration costs and one-offs) fell by 12% to €292 million. Reported net income was positively impacted by an exceptional tax benefit.

EBITA was down 9% on a reported basis while underlying EBITA decreased by 10% and organically by 8%.

According to Reuters, the 10% drop in underlying earnings to €264 million and 5% (reported) fall in revenue during the quarter both matched analysts’ forecasts.

“We generated a strong set of results in the fourth quarter and delivered a solid and competitive performance for the year,” CEO Jacques van den Broek said. “Our revenue trend recovered consistently month-by-month from April to December, with activity momentum in January 2021 reaching last year's pre-pandemic levels, driven by our operational agility and diversified portfolio.”

“We saw ongoing demand for essential services and our in-house concept performed strongly, delivering good growth in the quarter,” van den Broek continued. “We generated strong free cash flow in the year and our balance sheet position is healthy and solid. We continue to see good momentum for accelerating investments in growth and digitalisation, while utilising the flexibility of our cost base. At the same time, visibility remains limited with ongoing macroeconomic uncertainty due to the Covid-19 pandemic.”

“Our digital transformation strategy helped us to pivot quickly to a virtual working environment and continue to support our clients with digital tools and safety protocols through our #newways program,” van den Broek said. “By harnessing the power of data, we were able to identify and fill relevant existing and new roles, such as Covid-19 medical screeners and staff working in test and trace. We remained focused on talent, seamlessly moving people from declining sectors to those in high demand through reskilling and redeployment. This focus will continue to be critical in narrowing the skill gaps and preventing unnecessary redundancies in an ever changing labour market.”

In a video, van den Broek added, “We used our digital tools and our extensive knowledge on health and safety, in our Safety Back to Work Alliance and in our #newways project.”

Revenue by Geography

In North America, revenue recovered from Q3 2020 (-10%). While permanent fees were down 21% in Q4  2020, revenue of the group’s combined US businesses was up 1% organically. US Staffing/Inhouse Services grew by 7%. US Professionals revenue was down 6%. In Canada, revenue was down 5%.

In France, revenue also improved over the previous quarter (Q3 2020: -16%). Permanent fees were down 10% compared to last year. Staffing/Inhouse Services revenue declined 6%, while the Professionals business was down 9%.

In the Netherlands, revenue recovered compared to the previous quarter (Q3 2020: -17%). Overall permanent fees were down 25%. The combined Staffing and Inhouse Services business was down 7%, while the Professionals business was down 1%.

In Germany, the revenue decline was an improvement over the previous quarter (Q3 2020: -21%). Permanent fees were down 13% compared to last year. The combined Staffing/Inhouse Services business was down 4%, while Professionals was down 11%.

In Belgium & Luxembourg, revenue was down 3% organically (Q3 2020: -12%). Permanent fees were down 22% compared to last year. The Staffing/Inhouse Services business was down 3%.

Revenue per working day in Italy was stable compared to the prior year (Q3 2020: -10%). Overall permanent fees were down 12%.

In Iberia, revenue per working day was down 4% on an organic basis (Q3 2020: down 16%). Permanent fees were down 40% compared to last year. Staffing/Inhouse Services combined was down 4%. Spain was down 5%, while in Portugal revenue was down 3%.

Across 'Other European countries', revenue recovered over the previous quarter (Q3 2020: down 12%). In the UK, revenue was down 14% (Q3 2020: down 23%), while in the Nordics, revenue was down 13% on an organic basis (Q3 2020: down 15%). Revenue in the Swiss business was down 1% YoY (Q3 2020: down 4%).

Overall revenue in the 'Rest of the world' region declined by 1% organically (Q3 2020: down 2%). In Japan, revenue declined 4%. Revenue in Australia/New Zealand was down 5%, while revenue in China declined by 9%. Randstad’s business in India was up 1%, while in Latin America revenue grew 24%, primarily driven by Brazil and Argentina.

There was a mixed performance among Randstad’s Global Businesses segment. Overall organic revenue growth per working day was down 7% (Q3 2020: down 17%). Randstad Sourceright revenue decreased by 2%, while Monster revenue was down by 26%. The counter-cyclical outplacement and reskilling platform RiseSmart more than doubled in revenue.

Revenue by business line

Randstad also reported revenue for the full year ended 31 December 2020 of €20.71 billion, down 12% on an organic and reported basis when compared to the previous year.

In the group’s annual report, van den Broek said, “Although our group revenue was down 12% organically year-on-year, we outperformed the market in several key geographies, such as the US, France, and Belgium. The strong operational agility of our highly experienced management teams, our diversified portfolio, and disciplined cost management have all contributed to our recovery.”

“The unprecedented challenges that confronted us in 2020, and the lessons we learned, helped to further reaffirm our market leadership. We are now even more agile, flexible, and committed to getting people back to work and businesses operating at their full potential,” van den Broek added.

In its outlook Randstad highlighted that the development of volumes in January are reaching last year's pre-pandemic levels with continued improved momentum. Q1 2021 gross margin is expected to be modestly lower sequentially due to seasonality. Q1 2021 operating expenses are expected to be broadly in line sequentially.  In January, Randstad is seeing improved momentum in North America, the Netherlands, Germany, Iberia and Italy while France and Belgium are stabilizing.

Randstad set a new 52-week high during today's trading session when it reached €56.66. Over this period, the share price is up 6.92%. Shares last traded at €55.92, up 2.95% on the day. The company has a market cap of €9.96 billion.