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World – Randstad revenues fall in Q2 amid mixed results

25 July 2013

Randstad (RAND: AEX), the second largest staffing firm in the world, continued to see mixed results in the second quarter of 2013. Businesses in France, Belgium & Luxembourg, and the Netherlands continue to face tough markets, while improvements can be clearly seen in Germany and the United Kingdom.

In the period, revenue fell by -4% organically for the second quarter of 2013, compared with the same period last year. Revenue fell from €4.3 billion in Q2 2012 to €4.09 billion for Q2 2013. Gross profit also fell by -3% organically across the same period, from €782.4 million to €746.9 million.

Ben Noteboom, CEO of Randstand commented: “Efficiency continued to improve in the second quarter. On operational performance, our people did an excellent job delivering more profit on a somewhat lower revenue base. This is the case for all lines of business. We amply fulfilled our commitment to reduce costs. The month of June was robust, with growth in Spain, Portugal, Brazil, and Hong Kong; as well as in Sweden, Norway, and Switzerland. We are confident that we will be able to maintain our discipline and we are ready to grasp commercial opportunities that may present themselves.”

Good cost control meant that underlying operating income improved by +10% to €146.2 million and the EBITA margin advanced from 3.1% to 3.6%. Corporate headcount was reduced particularly in the Netherlands, Belgium and UK while additional employees were hired in the US to take advantage of the stronger American staffing market.

Looking forward Randstad predicts a continuing stable trend moving into the third quarter and is encouraged that the revenue decline for June eased to only -2.6%. Ongoing corporate restructuring is planned in France, the Netherlands and Belgium. In France alone 275 branches in larger cities will be consolidated into 65 offices and 165 management positions will be eliminated. At the same time,  Randstad plans to make additional investment in marketing of around €15-20 million in some of its largest markets. In the third quarter, Randstad will also consolidate the financial results of the activities recently acquired from USG People.

In North America, revenue fell organically by -3% from €995.4 million in Q2 2012 to €944.8 million in Q2 2013. Permanent fees grew by +6% and as a result gross profit was just below the level of last year, despite the decline in revenue. North America accounts for 23% of Randstad’s global revenue. Integration costs during the second quarter equated to €1.2 million, following the full integration of the Staffing and Inhouse businesses purchased in 2012.

Revenues fell organically by -13% in France, from €831.9 million last year to €728 million in the second quarter of this year. The slowdown was visible across all segments, except for food and aerospace segments, which delivered good growth. Revenue was also impacted by a strong comparison base in 2012 with staffing falling -14% below last years’ levels. France represents 18% of total company revenue.

The Netherlands, Randstad’s home market, recorded a fall of -4% in revenue, to €669.8 million; down from €698.8 million the year before which the company claims is in line with trends in the Dutch market. Revenue fell organically by -5% in June 2013 suggesting that recovery is still some way off. However, Randstad commented that their performance in the Netherlands is on par with last year with revenue per working day remaining relatively stable throughout the quarter. The Netherlands represents 16% of total revenue.

Despite recording higher revenue figures, an increase of €9 million to €464 million during Q2 2013, Randstad Germany reported that organic revenue was flat. Declining volumes were mitigated by a positive price effect of around +7%, as a result of the implementation of equal pay and the wage increases in the Collective Labour Agreements. The Professionals staffing segment revenue grew +3% during Q2, while IT revenue recovered from a slow start at the beginning of the year growing by +12%. Engineering remains under pressure despite returning to profitability. Germany represents 11% of total revenue.

Belgium and Luxembourg revenue fell -8% organically to €295.6 million with the company reporting no improvements in the slowdown of the industrial and automotive segments. The administrative segment held up well while professional recruitment fell -3%. Belgium and Luxembourg represents 7% of total revenue.

In the United Kingdom revenue increased +2% on an organic basis to €192.8 million, with a strong +13% growth in professional recruitment led by Education, Construction & Engineering, IT, and MSP & RPO. However, permanent fees were -13% lower than in the same period last year. Education grew by +11%, while Randstad Care returned to growth. Staffing revenue grew by +18%, helped by strong demand in the public sector. The Inhouse business contracted -28% but Randstad Sourceright achieved good growth in MSP thanks to a number of client wins. The UK represents 5% of total revenue.

Revenue fell -2% organically across Iberia to €196.6 million as a result of public holidays and bridging days depressed the company performance in April and May. Revenue in Spain was down -1%, despite increased demand in manufacturing and distribution. Revenue in Portugal decreased -2% despite increased demand in the automotive industry and good performance in the call-centre business. Revenue improved in both countries during June (+6% in Spain and +7% in Portugal compared with June 2012). The Iberian Peninsula represents 5% of total revenue.

In other European countries, revenue grew organically +6% to €238.4 million. Revenue in Italy remained flat with growth being led by strengthening demand in the industrial segments. Swiss revenue grew +9% led by strong performance in construction and the industrial segment. Polish revenue grew +12% driven by strong performance in Staffing, Inhouse, and permanent placements. Growth in Norway and Sweden contributed to a +39% increase in revenue. Hungary and Greece remained under pressure, while the Czech Republic revenue grew by +16%. Other European countries represent 6% of total revenue.

The Rest of the World reported revenue growth of +6% on an organic basis to €365.7 million. In Japan revenue grew +1% led by good performances in logistics and retail. The trend eased compared to previous quarters following a relatively slow start to the Japanese fiscal year. Revenue is Australia and New Zealand fell -2% compared with last year. Good performance in staffing, especially in the industrial segment, was offset by continued weak demand in professional recruitment and permanent placements. Demand in Finance & Accounting remained low but good performances were noted in IT and Sales & Marketing. China grew by +11% based on strong performance in temporary staffing and payroll services. The business was somewhat impacted by uncertainty associated with the implementation of new legislation as of 1 July 2013. Growth in India eased to +5%. In Latin America, Randstad’s Argentinian business expanded further and the Brazilian business continued to grow rapidly. Strong gross profit growth was achieved in Mexico and Chile. The Rest of the World represents 9% of total revenue.

 Investors were encouraged by the results and the company’s share price opened at €36.71, an increase of +1.03% on the day and an increase of +69.08% compared with last year. Based on its current share price, the company has a market value of €6.58 billion. 


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