Daily News

View All News

Netherlands – Randstad suffers European market deterioration in Q3

25 October 2012

Dutch staffing company Randstad (RAND:AEX) said on Thursday that markets continued to deteriorate across Europe with the firm seeing “more challenging” environments in France and Germany during the third quarter of the year. This comes after the firm announced job cuts across its German and Dutch businesses in June.

“Our performance in North America and Japan was again solid but European conditions softened further,” said CEO Ben Noteboom.  

“In France, business confidence is eroding fast. Many clients in Europe feel the effects of economic uncertainty. There is an urgent need to reform European labour markets.”

The firm also announced three alliances with staffing companies in countries where Randstad has no presence. This includes Adcorp in South Africa, ANCOR in Russia, and Barona in Finland. Each firm is the market leader in its own country, according to Staffing Industry Analysts’ research. “The aim of the alliances is to team-up in international tenders and cross-referral of work across the respective geographies,” the firm said.  

Revenue up but profits slip

Group revenue in the period was down organically by -5% to €4.39 billion. Revenue contracted across all European countries year-on-year. In the Rest of the World, revenue was up +5% on an organic basis to €408.0 million while North America grew organically by +2% to €1.0 billion.

Total gross profit increased +4% to €799.2 million with the gross margin rising to 18.2% from 18.1% a year ago. But the firm saw increased margin pressure in Southern Europe. In Germany and the Netherlands, gross margin pressure eased.

The world’s second-largest recruiter reported a -16% fall in operating profit which was down to €102.2 million in the quarter though the underlyin’ EBITA was reported as being reduced by a less severe -8%. Net income dropped by -13% to €68.8 million.

The firm continued its cost cutting measures in the three months to September, reducing operating expenses by €18 million from the previous quarter, particularly across Europe. But underlying operating expenses were still +8% higher when compared to last year at €637.8 million.

Since the end of Q3 2011, the number of full time employees has been reduced by 1,980, or -6% with most of the reductions coming from Europe. The company’s network was reduced by 217 offices (-5%) with 40 offices closing in the last quarter.

The company disposed of the UK staffing business, Select Appointments, which operates a franchised business model across 39 offices across the UK, including the Parkhouse industrial staffing brand. This follows the disposal of other small businesses in Malaysia and Thailand during Q2 2012.

“We are actively protecting client profitability, and our costs are substantially down quarter-on-quarter, which means we are on track to reach our savings targets," said Mr Noteboom.  “In addition, we are monitoring productivity and efficiency of the whole organization, including overhead and head office costs. As a result, we expect to incur restructuring costs in Q4 2012.”

Staffing revenues in the quarter dropped -1% to €2.73 billion, while Inhouse services reported growth of +15% to €786.1 million. Randstad’s Professional segment saw a +11% increase in revenue to €877.9 million.

Europe “challenging” in Q3

Europe remained troublesome with revenue in France falling by -12% to €797.0 million. Staffing revenue was down -12% from last year, and sales contracted by -17% in the professional segment. Perm fees declined -9% and the gross margin fell by -0.2%. No segment reported revenue growth in the quarter.

In the Netherlands, revenue declined by -6% to €718.5 million with the gross margin staying below last year’s. The administrative segment and Tempo Team brand performed well while revenue at Yacht dropped by -6%. Demand was up in finance and public sector jobs, but remained flat or declined in the majority of business segments. The firm faced restructuring costs of €7.5 million in the quarter.

In Germany, revenue fell -8% to €484.9 million. “As expected, we also experience increased uncertainty in the German market around the implementation of equal pay” coming into force next month, the company said.  Staffing revenue contracted by -13% but the professional sector saw growth of +11%, led by high demand in IT and health & social work.

In Belgium & Luxembourg, revenue declined by -7% to €352.9 million with the staffing business contracting by -10% while the professional segment grew by +2%. The gross margin was flat year-on-year.

In the United Kingdom, revenue increased by +2%to  €203.5 million with temporary staffing driving growth in engineering, finance and managed services. The care business was under pressure and the firm also reported lower temporary margins.

In Iberia, revenue fell by -13% to €202.2 million. In Spain, revenue declined by -12% due to lower demand in manufacturing and distribution. In Portugal, sales contracted by -13%.

In other European countries, revenue declined by -6% to €228.2 million. In Italy, sales were down -9% while in Switzerland revenue increased +2%. The firm said that revenue declines in Scandinavia eased. In Eastern Europe, Czech revenue dropped by -4% and the firm lost out on a major contract in Hungary, putting the local business under pressure.

Despite the worsening results, the company managed to beat analysts’ expectations and, therefore, the stock market responded positively to the news. The firm’s share price was up +3% to €26.86, a +4.1% rise from a year ago and -0.7% below its 52-week high of €30.09 seen in March this year. The firm has a market capitalisation of €4.49 billion, making it the second-largest recruiter in the world by market value.


Add New Comment

Post comment

NOTE: Links will not be clickable.
Security text:*