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The Netherlands — Revenue trend gradually turning at Randstad

29 October 2009

Organic growth at Randstad (RAND:AEX), excluding the impact of currency effects, acquisitions and disposals was down by -28% from 4.4 billion Euro in Q3 2008 to 3.2 billion Euro in Q3 2009. The temporary and permanent staffing group, announced today in its interim results for the third quarter of 2009 ended 30 September.

The organic revenue trend improved slightly during the quarter moving from -30% at the beginning to -26% at the end of the period with Germany, Spain and the US showing the clearest improvements.

EBITA was down by -56% from 243.2 million Euro in Q3 2008 to 107.7 million Euro in Q3 2009. Net income was down by -22% from 78.5 million Euro in Q3 2008 to 60.9 million Euro in Q3 2009, whilst adjusted net income was down by 53% from 154.6 million Euro to 72.5 million Euro during the same period. While it operates in 46 countries, 56% of Randstad’s EBITA in Q3 2009 was derived from just one market; the Netherlands. Benelux and Germany combined accounted for 90% of the Company’s total EBITA.

Operating expenses were reduced by -25% to 503 million Euro, not quite matching the decline in profitability but 5% lower than in Q2 2009 and also lower than the Company’s prior guidance. Net debt was reduced by 355 million Euro to 1,167 billion Euro.

The number of offices at the end of the quarter was 4,181 which is -25% less than Q3 2008. Headcount was also down by -25% to 26,470 when compared to Q3 2008 and -5% compared to Q2 2009.

In Europe, the Company saw lessening revenue declines in France, Germany, Belgium/Luxembourg, Spain and Sweden while relatively flat performances were derived from the Netherlands, UK, Italy, Denmark and Norway. Randstad managed to grow revenues in some smaller European markets notably Turkey, Hungary and Greece.
Better performing sectors highlighted were industrial, logisitics, financial services, healthcare, IT, contact centres and government-related segments.

EBITA declined organically by -85% in France, -38% in the Netherlands, 59% in Germany, 44% in Belgium/Luxembourg and 54% in Iberia. Randstad’s UK business continued to make a loss with EBITA of -0.2 million Euro in the third quarter and increased contraction in the engineering/construction sector, while the Company’s “other European countries� region was also loss-making.

The Company made a number of disposals during the quarter including its 75% stake in UK-based MOT Models and also offloaded investments in a couple of small Japanese businesses. In October, Randstad also signed an agreement to sell its Dutch-based salary admin and payroll service provider, CIAN.

"It is encouraging", says Ben Noteboom, CEO of Randstad, "that the revenue trend has become a little better through the quarter on average, a trend which has continued in October. The pattern is classic, with professionals businesses stabilizing, while staffing and in-house services are gradually picking up in several geographies.
Stringent cost control has paid off. We will certainly need to keep a close eye on costs [over] the coming quarters, especially in view of increased pressure on gross margin."

The Company plans a substantially increased marketing effort in France, including a national TV campaign, in the final quarter of 2009.

In early trading Randstad's shares were down by -4.62% to 25.58 Euro.



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