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World – Hudson results tempered by declines in Asia-Pacific

31 October 2013

Global talent solutions company Hudson Global Inc. (HSON: NASD) reported revenue for the third quarter ending 30 September 2013 of USD 163.6 million, a drop of -12.9% (-10% in constant currency) compared with USD 187.9 million for the same period last year.

The company reported a gross profit of USD 55.8 million for the period, a drop of -17.5% (-15.4% in constant currency) compared with USD 66.1 million a year ago. Gross margin for the period was 34.1%, an decrease from 36% last year. Hudson reported a net loss of USD 5 million for the third quarter, compared with a net loss of USD 2.2 million last year.

Manuel Marquez, Hudson Chairman and CEO, commented: “Our third quarter results were consistent with our expectations and reflect the continuing progress we are making to put the business on a path towards sustainable profitability and top-line growth. Our recently reinforced leadership is already getting traction, working with their teams to sharpen execution throughout our organisation.”

“Despite the anticipated difficult conditions in several major markets, particularly in Australia, we believe the business is trending positively overall, and we are gaining momentum as we continue to reduce our cost base, while investing selectively to drive top-line growth.”

Revenue from European operations fell year-on-year, by -6.4% to USD 70.5 million from USD 75.3 million. Gross profit for the region dropped to USD 25.4 million from USD 28.2 million, equating to an organic drop of -12%, year-on-year. Gross profit declines have been primarily attributed to softness in temporary contracting in the UK and talent management across continental Europe. European gross margin for Q3 2013 was 36%, down from 37.5% in Q3 2012.

Revenue from Asia-Pacific fell substantially during the period from USD 73.4 million in Q3 2012 to USD 58.3 million in Q3 2013, equating to a fall of -20.6%, year-on-year. The company also reported a fall in gross profit, falling organically by -23% to USD 21.3 million from USD 29.9 million. Weak economic conditions and reduced hiring in Australia contributed to fall in gross profit. While circumstances remain difficult through Asia-Pacific gross profit in Australia and New Zealand in contracting and permanent placement increased by +2% sequentially, while gross profit in China increased by +14% sequentially. Asia-Pacific gross margin for Q3 2013 was 36.6%, down from 40.6% in Q3 2012.

Across the Americas, the company reported revenue of USD 37.3 million, a fall of -5.6% compared with revenue of USD 39.5 million last year. Gross profit for the period fell by -5% from USD 9.4 million to USD 9.2 million, year-on-year. The year-on-year decline has been attributed to a -18% reduction in IT gross profit and a -4% decline in Legal eDiscovery. Gross margin for the Americas during Q3 2013 was 26%, down from 24.5% in Q3 2012.

Hudson provides specialised professional-level recruitment and related talent solutions worldwide. The Company's core service offerings include Permanent Recruitment, Contract Consulting, Legal eDiscovery, Recruitment Process Outsourcing (RPO) and Talent Management solutions. As of December 31, 2012, the Company operated in 20 countries with three geographic business segments: Hudson Americas, Hudson Asia Pacific, and Hudson Europe. As of December 31, 2012 , there were approximately 460 Hudson Americas clients, 1,200 Hudson Asia Pacific clients and 2,700 Hudson Europe clients.

Based on its current share price, the company has a market value of USD 115.9 million.    

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