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Netherlands — Improved results and increased confidence at Randstad

29 July 2010

Randstad Holding (RAND:AEX), the world's second largest staffing firm, today publishes its results for the second quarter (Q2) of 2010 and the six months (H1) ended 30 June.

Q2 revenues were up by +16% from 2.98 billion Euro in 2009 to 3.46 billion Euro in 2010. H1 revenues were up by +8% from 6.04 billion Euro in 2009 to 6.5 billion Euro in 2010.


Q2 EBITA was up by +127% from 54.4 million Euro in 2009 to 123.7 million Euro in 2010. H1 EBITA was up by +310 from 48.6 million Euro in 2009 to 199.1 million Euro in 2010.

Q2 underlying EBITA (before amortisation/impairment, acquisition-related intangible assets and goodwill, integration costs and one-offs) was up by +79% from 67.0 million Euro in 2009 to 119.7 million Euro in 2010. H1 underlying EBITA was up by +68% from 116.2 million Euro in 2009 to 195.1 million Euro in 2010.

Q2 net income was up by +382% from 11.6 million Euro in 2009 to 55.9 million Euro in 2010. H1 net income was up by +290% from a loss of -41 million Euro in 2009 to 77.7 million Euro in 2010.
 

The Netherlands
Revenue decreased by -5% organically compared to -14% in the previous quarter. The Dutch market is more late-cyclical than other markets due to the relatively larger weight of the services segment in the overall economy. The patterns are similar and the market reached the turning point during the quarter.

Tempo-Team performed in line with the market. Randstad was somewhat behind the market, lagging the growth in the industrial segment, partly because of pricing. Revenue at Yacht, which is active in the more late-cyclical and more public sector geared professionals segment, continued to be markedly down. As, in view of the turning point in the market, operating expenses were relatively flat sequentially, EBITA was somewhat under pressure, with the EBITA margin reaching 5.7% compared to 7.2% in Q2 2009.
 
France
Revenue increased organically by +18%, compared to +1% in the previous quarter. Growth is carried by all business units, with the manufacturing industry acting as main growth driver. The gap versus the market narrowed and was closed by June. Randstad opened five in-house locations for new clients, while the group added another six in transferring clients out of the previous Vediorbis network. Permanent fees were up by +28% for the full quarter. The professionals segment turned in slight growth, after 2 years of revenue declines. The EBITA margin amounted to 3.5% (or 2.2% excluding the 10 million Euro business tax reclassification) compared to 0.8% in Q2 2009.

The French portfolio was streamlined. In June Randstad sold Vedior Front RH, a small HR consultancy business. In 2009 Vedior Front RH generated revenue of 1.4 million Euro. On 23 July 2010, Randstad announced the agreement to sell Selpro. In 2009 Selpro generated revenue of 63 million Euro.
 
Germany
German revenue increased very rapidly. Organic growth reached +40%, compared to +10% in the previous quarter. Execution was strong and the German businesses grew clearly faster than the market. The revenue trend improved throughout the quarter in staffing and in-house, driven by a strong pickup across all industrial segments. In professionals, the engineering/aerospace segment remained slow, whereas growth in the IT business continued to accelerate. The EBITA margin reached 5.4%, compared to 2.2% in Q2 2009.
 
UK
On an organic basis revenue increased by +1%, compared to -6% in the previous quarter. Revenue in the combined staffing and in-house services businesses showed double digit growth based on higher volume with existing in-house clients and client gains.

Revenue in the professionals segment still contracted YoY based on reduced temporary revenue. Growth in smaller segments such as Finance, HR and Media continued, while Engineering/Construction did well in perm in a difficult market. Education and Healthcare faced some pressure. For the whole UK permanent placement fees were up by +15% organically, with growth strengthening during the quarter, compared to minus 13% last quarter. The EBITA margin amounted to 2.0%, compared to - 0.1% in Q2 2009.
 
Belgium/Luxembourg
Revenue increased by +13% organically, compared to -2% in the previous quarter. Randstad was back at market growth, beating the market in the industrial segment especially through in-house. Tempo-Team was somewhat below market, doing relatively better in the administrative segment. The EBITA margin remained virtually stable at a healthy 5.2% (5.3% in Q2 2009).
 
Spain and Portugal
Revenue increased by +11%, compared to +7% in the previous quarter. The Spanish business grew against easy comparables.

The Portuguese business continued to do well, showing double digit growth. The Vedior network in Portugal has been rebranded to Tempo-Team during the quarter. The larger Select business will be rebranded to Randstad in September. Randstad was not allowed to do this earlier, after divesting Randstad Portugal to obtain clearance for the Vedior merger. Costs were managed well and the EBITA margin improved to 1.1%, compared to -0.6% in Q2 2009.
 
Other European countries
The other European countries showed solid growth across the board. In Italy revenue was up over +20%, with momentum building and the gap versus the market narrowing. The Polish and Scandinavian businesses continued to show strong growth, while this was also the case in Turkey, Hungary, and Greece. The Swiss business returned to growth as well. For the combined region the EBITA margin reached 1.9%, compared to -1.7% in Q2 2009.
 
North America
Revenue increased by +22% on an organic basis, compared to +9% in the previous quarter. Growth in the combined US staffing and in-house services businesses was well above 30%. The US professionals business strengthened during the quarter, turning in double digit growth overall. IT and Finance & Accounting were the main growth drivers in the professionals segment. The Canadian business strengthened as well, reaching double digit growth over the quarter. North American perm fees were up more than 20%. The North American EBITA margin improved to 3.1% compared to 1.2% in Q2 2009.

Rest of the world
The Australian business grew by over +20% over the full quarter, with perm fees growing faster. The Latin American businesses (Argentina, Chile, Mexico, Brazil and Uruguay) showed strong growth on average of +30%. India and China showed solid growth as well. The Japanese business returned to growth with a single digit growth figure over the full quarter. For the combined region, the EBITA margin reached 1.2%, compared to -0.9% in Q2 2009.
 

Ben Noteboom, CEO Randstad Holding, said "growth has continued to accelerate through the quarter" says. "It is great to see that by the end of this quarter we employed around seventy thousand candidates more than in the same week a year ago. Across all countries our people are doing a great job coping with big jumps in industrial placements, enabling our clients to step up capacity."

"We now also see corresponding recoveries in administrative and professionals segments. Some key economies like the USA, Germany and France are clearly growing and our businesses in these countries are taking the lead in stimulating our growth. Similar patterns are emerging now elsewhere in Europe and Asia Pacific."

"The late cyclical Dutch market traditionally lags a little, but the trends are positive here as well. With productivity at the highest level since six quarters, we face the future with increasing confidence. Based on current trends we expect to be able to pay dividend over 2010."
 
ABN Amro analyst Teun Teuwisse told the Wall Street Journal "Randstad's second-quarter revenue is fantastic,". He added that the firm's revenue in the Netherlands is lagging a bit, but that isn't a real surprise. Teuwisse rates Randstad at buy.

In early trading Randstad's shares were up by +0.49% to 36 Euro.

 

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