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Netherlands — Randstad signals strong revenue recovery in March and April

28 April 2010

Randstad Holding (RAND:AEX), the world's second largest staffing firm, today publishes its results for the first quarter of 2010 ended 31 March.

Revenues were down by -1% from 3.055 billion Euro in Q1 2009 to 3.035 billion Euro in Q1 2010.

Gross profit declined organically by -7% to 575.0 million Euro, however, gross margin has been relatively flat sequentially since Q3 2009 as commercial pressures have eased.

Operating expenses were reduced by -12% from 564.7 million Euro in Q1 2009 to 499.6 million Euro in Q1 2010.
Underlying EBITA (before amortization/impairment, acquisition-related intangible assets and goodwill, integration costs and one-offs) was up by +53% from 49.2 million Euro in Q1 2009 to 75.4 million Euro in Q1 2010. Organically, EBITA was up by +26%.
The Netherlands
Revenue decreased by -14% organically, compared to -21% in the previous quarter. Tempo-Team and Randstad performed in line with the market. Due to the client mix and the focus of the Dutch economy the Dutch market is more late cyclical than other markets but the patterns are similar. The combined Dutch in-house businesses, focused on the industrial and logistical segments, reached the turning point in March. Yacht, which is active in the more late cyclical professionals segment, remained below the market average. Pressure on the temporary employment margin has stabilised. EBITA was maintained at a good level, with the EBITA margin reaching 6.2%, compared to 5.8% in Q1 2009.
Revenue increased organically by +1%, compared to -19% in the previous quarter. In staffing and in-house services, light industry and automotive improved, whereas activity in construction remained at low levels. Randstad was still below market but with staffing, in-house and permanent placement gaining momentum, the Company expects to close the gap by midyear. The professionals business was still down for the quarter but returned to growth in March. The EBITA margin (excluding business tax reclassification) amounted to 0.0%, compared to -0.1% in Q1 2009. Regular operating expenses included costs for office closures and redundancies of approximately 2 million Euro.

German revenue increased by +10% organically. The revenue trend improved throughout the quarter in staffing and even more so in in-house services, driven by a strong pickup across all industrial segments. In professionals, the engineering/aerospace segment remained slow, whereas growth in the IT business accelerated. In the traditionally weak first quarter, the EBITA margin reached 4.3%, compared to 1.4% in Q1 2009. The German result included a wage cost related release of approximately 2 million Euro.
On an organic basis revenue declined by -6% year-on-year in the UK, compared to -19% in the previous quarter. Revenue in combined staffing and in-house services businesses showed double digit growth based on higher volume with existing clients and client gains. The year-on-year contraction in the professionals segment eased, while professional revenue was flat quarter-on-quarter including a sequential pick up in permanent placement fees. Recovery is ongoing in smaller segments such as Finance, HR and Media, while Engineering/Construction started to show sequential improvement in permanent fees. The Education segment suffered from widespread school closures in January (due to bad weather) and tougher market circumstances but solid profitability was maintained. The Healthcare market faces some pressure. For the whole UK, permanent placement fees were down by -13% organically year-on-year while they were up by +18% sequentially. The EBITA margin amounted to 2.2%, compared to 2.3% in Q1 2009.
Revenue came down by -2% organically, compared to -16% in the previous quarter. Tempo-Team continued to outperform the market. Randstad closed the gap by gaining some share in the industrial segment through a good performance of their in-house services. The combined Belgian businesses returned to growth in March. Gross margin held up relatively well but costs were still relatively high. The EBITA margin reached 2.9%, compared to 3.3% in Q1 2009.
Revenue increased by +7%, compared to -9% in the previous quarter. The Spanish business returned to growth, against easy comparables. The Portuguese business continued to do well, outperforming the market and showing double digit improvement.
Other European countries
Growth in the other European countries varied but showed a strong rebound across the board. In Italy revenue still declined, but momentum is building and in March revenue was almost flat. Randstad's Polish business continued to show significant growth. Growth in the Scandinavian business was very strong, while this was also the case in Turkey, Hungary, and Greece. For the combined region the EBITA margin reached 0.6%, compared to 0.1% in Q1 2009.

Ben Noteboom, CEO Randstad Holding, said "in a quarter that is historically the weakest of the year, we achieved a solid performance, thanks to cost control and careful attention to margins. In March, revenue recovered strongly, with the industrial segments leading the change."

"Our US and German businesses are well over last year's levels, while the Netherlands is still lagging. In the US, our professionals business has also returned to growth in March. Clients have clearly taken the message that with increased volatility, flexible solutions are the answer."

"We expect growth will also return and accelerate in many other specialised and professional segments, as well as in the Dutch market. Our people are ready to benefit from any opportunity. We have the capacity, while reinforced commercial programmes are in place. Our prospects for the near future are better than they have been for quite some time."
Randstad sees the improving performance achieved in March continuing into April. The company also believes that the recovery is broad-based in terms of regions and segments. In its outlook statement, the Company warned that operating expenses will increase in Q2 as the company selectively invests in people and marketing.
In early trading Randstad's shares were up by +1.09% to 40.69 Euro.



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