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Netherlands – Economy puts brake on USG People European growth

27 July 2012

Dutch staffing firm USG People (USG:AEX) reported on Friday that economic uncertainty put a brake on European growth in the second quarter of the year, resulting in especially weak demand in the firm’s staffing segment. The company refrained from issuing an outlook on 2012 earnings, but said that the economy in Europe will continue to show “moderate growth” in the second half of the year.

The agency, ranked eighth in the world, saw quarterly revenue decline by -11% to €720.2 million while gross profit dropped -12% to €151.6 million. The gross margin decreased by -0.1% to 21% due to a lower number of working days in the quarter.

Earnings before interest, tax and amortisation (EBITA) fell -6% to €20.1 million while net income also dropped to €5.0 million, a reduction of -2%. The EBITA margin improved by +0.2% to 2.8%.

“We have kept the profitability of our activities at a good level,” said Rob Zandbergen, CEO of USG People, despite the economic strain. “We were able to improve our EBITA margin thanks to a disciplined pricing policy and timely adjustment of our operating expenses.”

This comes after competitor Randstad published its second-quarter results yesterday, seeing no growth in its European market as staffing services have been hit by Europe’s ongoing debt crisis.

At USG, General Staffing revenues in the quarter slumped by -12% to €417.9 million with its two largest markets in this segment, the Netherlands and France, seeing reductions of -11% and -14% respectively. All countries, including Belgium, Luxembourg and Spain, reported a decline in revenue in this business, which generates a large part of sales from clients in the industrial sector.

Specialist Staffing revenues dropped even sharper by -14% to €243.1 million in the second quarter. The largest declines in revenue was in Germany (-22%) and Italy (-19%) and the firm blamed the recruitment of technical flex workers in Germany on increasing shortages. It also warned that equal pay discussions, combined with the skill shortage, is putting pressure on growth and margins in the country. In Italy, demand in the temporary staffing market dropped as a result of the deteriorating economic situation.

The Professionals business was the only segment to report a rise in revenue of +9% at €59.2 million. The recent acquisition of Dutch staffing firm Control Finance helped boost sales in this division while strong growth was also posted in engineering, energy and legal. Revenue was lower in ICT and marketing & communication. In the Netherlands, Professional revenue was up +15% and remained flat in Belgium & Luxembourg.

USG People provides staffing, secondment, Human Resources (HR) and customer care services and operates across three segments: General Staffing, which includes staffing, secondment, recruitment and selection and pool management for call centres, the transport, healthcare and technical sectors. Specialist Staffing, which focuses on administrative, commercial, financial, medical, management support, HR, multilingual and technical staff; and Professionals, which focuses on qualified and specialist staff in communication and marketing, legal, financial, HR, IT and technical.

The stock market did not react positively to today’s announcements as USG’s share price dropped by -4.9% to €5.23 in early trading, down -50.3% from a year ago and +16.2% above the 52-week low of €4.50 set in November 2011. The firm has a market value of €438.44 million. 

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