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Netherlands – USG People revenue and gross profit decline

26 April 2013

Dutch staffing firm USG People (USG:AEX) said Friday that the decline in revenue gradually eased during the first quarter, but the recruiter warned of persistently challenging market conditions in Europe. The firm, one of the largest recruiters in the world, expects markets to improve in the second half of the year.

Revenue in the first three months of the year dropped -9% to €640.7 million from €705.1 million in the prior year. Revenue also dropped -9% for the first quarter between 2012 and 2010. The firm said the quarterly decrease in revenue per working day slowed year-on-year from -11.4% in the fourth quarter to -6.2% in the first.

“In the first quarter we took a number of essential steps in the implementation of our strategy,” said Rob Zandbergen, CEO of USG People.

“Our financial position has improved … As a result of the divestments our activities are focused on markets where we can realise sufficient share, distinct quality and the scale to achieve a good yield and create value throughout the cycle.” This comes after the firm this month expanded its HR online solutions by acquiring a 51% stake in online job market communications firm Adver-Online.

Gross results in the quarter fell -14% to €130.8 million against €152.6 million a year earlier. The equivalent decline for the year before was -8%. Pricing pressures affected the gross margin which declined to 20.4% from 21.6%.

In the quarter, EBITA (earnings before the deduction of interest, tax and amortization expenses) more than halved to €8.2 million from €19.3 million a year earlier. After selling its energy brand and, more recently, some of its general staffing units to Randstad, the firm said total net proceeds on these sales was €17.9 million.

In the first quarter, net income totalled € 0.6 million, a reduction of -88% on the €5.7 million seen at the same time a year ago.  

“In view of current market conditions we are maintaining strict cost control while focusing sharply on the services we provide to our clients,” the company said in its outlook statement. “The introduction of USG Professionals and the rebranding of our existing professionals brands will take place in the second quarter.” The firm now expects to reduce its costs base by at least €25 million per year.

Staffing revenues declined during the first quarter. Revenue derived from the firm’s General Staffing unit fell -8% to €376.1 million. In the Netherlands, revenue in this segment was down -8%. But the firm said revenue declines improved from previous quarters in Belgium and France.  

In the Specialist Staffing division, revenue was down -13% to €209.6 million. Again, the fall in revenue slowed in the Netherlands, Belgium and Germany. In the Professionals unit, revenue fell -3% to €55.0 million as demand for professional staff weakened.

In early trading, the company’s share price fell -2.4% to €6.07, down -5% from a year ago. Based on this stock price, the firm has a market value of €495.51 million.


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