Dutch staffing giant Randstad (RAND: NV) reported revenue for the fourth quarter ending 31 December 2014 of €4.5 billion, an organic increase of 3.4% compared with €4.3 billion during the same period last year.

Currency effects had a positive impact on gross profit of €15.4 million in Q4 2014, compared with the same quarter last year.  

For the full-year 2014, Randstad reported annual organic revenue growth of 4.0% to €17.2 billion, up from €16.6 billion in 2013. 

Jacques van den Broek, CEO of Randstad, commented: “2014 was a successful year, especially with accelerating growth in North America and the Netherlands, and stable overall trends in Q4. The growth in January 2015 (6.5%) is also encouraging, especially as France seems to improve. Our growth rate in permanent placements remains solid and the attention to commercial activities is paying off.”

Randstad achieved revenue growth across most of its major markets in Q4 2014; the most notable exception being France, which accounted for 15% of group revenue during Q4 2014. On an annual basis, France was the only major market to report a decrease in revenue, compared with the previous year.  

The company’s geographical breakdown, in terms of revenue, is as follows:  

Randstad’s combined US business grew 7% in Q4 2014 compared with last year, driven by a strong performance in the industrial segment, with administrative growth accelerating during the quarter.

Revenue growth of 1% in Canada was in line with the market, which is now showing signs of stability. Growth of 5% in the Professionals business was offset by a 4% revenue decline in the Staffing and Inhouse business.  

In France, revenue contracted by 8% during Q4, but there has been some indication of improvement with the company reporting a revenue decline of only 1% in January 2015, compared with last year. The Q4 decline was driven by a further significant deterioration in the construction, aeronautics, and logistics sectors, which was only partially offset by higher demand in the automotive sector. The country’s Professionals business was down 1%, with demand in IT remaining weak and only partially offset by another good performance in healthcare.

The reorganisation of Randstad’s business in the Netherlands, announced in August 2014, was completed in line with expectations according to the Company. The efficiency improvement, expected to reap annual cost savings of €23 million, are expected to come to fruition throughout 2015. Both Randstad and its subsidiary Tempo-Team continue to see strong growth in SME and Professionals. Revenue from the company’s Yacht subsidiary, however, decreased by 4% during the quarter.

Yacht will be transformed by the end of Q1 2015, as Randstad is aligning all of its Dutch Professionals businesses under a single Professionals label. Overall, Randstad Professionals grew by 13% across all three businesses.

A decrease in volume across Germany was offset by a positive price effect of 4% resulting from the Collective Labour Agreement-related price increases and equal pay. However, wage cost increases and other regulatory changes slowed down the demand for temporary labour. In January, Randstad’s top line was down 2% compared with a year ago.  

Strikes that took place in December 2014 negatively impacted revenue from Belgium and Luxembourg, with revenue per working day down 1% compared with Q4 2013. In January, however, revenue rebounded and was up 8%. Inhouse Services saw revenue growth of 5%, while Staffing was down 3%. Both the administrative and industrial segments experienced a slowdown during the closing quarter of 2014. Randstad Professionals reported revenue growth of 7%, while permanent fees remained flat versus last year.

Revenue per working day in the UK was up 2%, while gross profit rose by 9% during Q4, emphasising the focus on profitable growth and permanent placements. Overall permanent fees increased by 16% in Q4, compared with the same period last year. Construction and Engineering again experienced strong growth, while the Finance business remained under pressure.

Both revenue and gross profit grew by 9% across Iberia during Q4 2014, compared with Q4 2013. In Spain revenue rose by 12%, with Inhouse growing by 35%, driven by client wins and conversion from the company’s Staffing business. Solid growth resulted from Randstad’s focus on permanent placements (up 54% compared with last year) and Professionals (up 98% from last year).

In Portugal, revenue grew by 4% during the period, led by the manufacturing and call centre segments. The company’s focus on permanent placements has also continued to pay dividends. 

Revenue from Italy grew by 8%, led by the industrial segment. The country’s Inhouse business grew by 12%. In Switzerland, revenue growth of 13% was reported. Continued investment in Poland resulted in revenue growth of 17% in Q4. In the Nordics revenue grew by 5%, while revenue in the Czech Republic increased by 22%, and in Turkey by 9%.

In Japan, revenue grew by 8%, driven by growth in logistics and retail.

Revenue in Australia grew by 24%. Temporary revenue accelerated further in Business Support and in the industrial segment. Permanent fees were up 34% during the quarter, compared with last year, driven by banking and construction. In the Professionals business, demand was led by Construction & Engineering and IT. 

Chinese revenue grew 41% with good performance across the IT and manufacturing segments. Growth in permanent placements was up 65% in Q4 2014, compared with Q4 2013. Randstad India grew revenue by 6% during the period.

Revenue in Argentina grew by 16%, despite challenging market conditions as a result of high levels of inflation. Good gross profit growth was reported in Brazil, where the company is focused on improving its business mix and capturing productivity improvements.     

Randstad operates three primary business segments: Staffing, Professionals, and Inhouse Services, with a breakdown in Q4 revenue as follows:

Randstad’s Staffing business reported revenue growth of 10% across North America during Q4 2014, compared with last year. In France, however, revenue deteriorate further and was down 10% over the same period. Revenue from Germany was also impacted by the transfer of clients from the Staffing business to the Inhouse Services segment and challenging market conditions.

The largest market for Inhouse Services remained North America which achieved revenue growth of 8% in Q4 2014, compared with last year. In Europe, growth was led by Iberia (35%), Germany (6%), the Netherlands (6), and Belgium (5%). The company returned to growth in the UK (4%) with the business being better positioned after the termination of some low-margin contracts last year.

Randstad Professionals reported gross profit growth of 7% in Q4, with permanent fees up by 23% compared with a year ago. The company noted continued progress in North America, with revenue up 1% in the quarter. Revenue at the combined Dutch business grew by 13%, driven by the strong performance of Tempo-Team and Randstad. Growth of 1% in the UK stemmed from the Construction & Engineering sector.

In France revenue decreased by 1%, with a good performance in Healthcare offset by weakness in the IT segment. In Australia, revenue grew by 26% with demand in permanent placements remaining strong.

The Company also announced that long-standing Board member, Leo Lindelauf has requested to resign from the Executive Board at the next AGM in April and will leave Randstad effective 1 May 2015. He will, however, continue in an advisory role until July 2016. Having joined Randstad in 1979 he is currently responsible for operations in Italy, Poland, Austria, Switzerland, Denmark, Sweden, Norway, Czech Republic, Hungary, Slovakia, Greece and Turkey. Responsibility for most of these countries will transfer to newest Board member, Chris Heutink in addition to his management of Randstad’s Dutch operations.

Looking forward, while the company reported 3.4% organic revenue growth in Q4 2014, in January it was up 6.5% despite a more challenging comparison base. Gross profit increased from 5% in Q4 to 9% in January and permanent placement revenue was up 17%.

This improvement was driven by continued solid growth in North America, an acceleration in the Netherlands, and improved conditions in France. While Germany was down 2% in January, revenue from Belgium & Luxembourg increased by 7%, with 20% growth reported across Iberia.

In trading today, on the basis of the optimistic outlook, the company’s share price rose by 4.6% to €50.14, an increase of 4% compared with last year. Based on its current share price, the company has a market value of €8.6 billion.