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World – Randstad sees a gradual recovery in Europe in Q4

20 February 2014

Netherlands-based global staffing giant Randstad (RAND: NA) reported revenue for the fourth quarter ending 31 December 2013 of €4.28 billion, a year-on-year organic increase of +2% compared with €4.23 billion for the same period last year. 

The second largest staffing firm in the world achieved a gross profit of €785.3 million, an organic rise of +3.6% from €772.2 million in Q4 2012. Randstad reported a net income for the period of €54.1 million, a significant improvement on a net loss of €97.4 million a year ago.

On an annual basis, Randstad reported revenue of €16.6 billion, an organic drop of -1% compared with €17.1 billion in 2012. Some of Randstad’s improvement in Europe can be attributed to Randstad’s acquisition of the General Staffing business of USG People in Spain, Italy, Austria, Switzerland, Poland, Switzerland, Poland, and Luxembourg.   

Ben Noteboom, the outgoing CEO of Randstad, commented on the results: “Growth continued throughout the fourth quarter of 2013, confirming a gradual recovery. Our increased investments in marketing have been well-timed, boosting brand awareness and preference, and strengthening our sales capabilities to benefit from growth opportunities.”

Mr Noteboom announced his retirement at the end of last year. He will be replaced by Jacques van den Broek later this month. 

North America, which remains Randstad’s largest region accounting for 21% of total revenue, reported revenue of €916.5 million in Q4 2013, an organic drop of -2% from €992.2 million in Q4 2012. On an annual basis, revenue fell by -3% to €3.7 billion, down from €3.9 million, in constant currency. 

The Netherlands replaced France as the company’s second largest business region during the fourth quarter, reporting revenue of €712.8 million, unchanged on an organic basis. Revenue derived from France fell from €728.1 million to €708.6 million, year-on-year, equating to a decline of -2% in constant currency. Both countries accounted for 17%, respectively, of Randstad’s total revenue during the fourth quarter.  

In terms of the full year, however, France remained the second largest region reporting revenue of €2.8 billion, an organic drop of -8% from €3.1 billion last year. The Netherlands achieved an annual revenue of €2.7 billion, a -2% organic drop from €2.8 billion in 2012.

Revenue from Germany, which accounted for 11% of total revenue, increased organically, year-on-year, during Q4 to €479.1 million, up by +9% from €440.8 million last year. Annually, revenue derived from Germany increased by +2%, in constant currency, from €1.8 billion to €1.9 billion.

In Belgium & Luxembourg revenue increased by +1% in constant currency to €321.5 million during the fourth quarter. Revenue from Belgium and Luxembourg equated to 7% of total company revenue in Q4 2013. On an annual basis, the region reported an organic drop of -5% in revenue to €1.2 billion, down from €1.3 billion.  

The United Kingdom achieved revenue during the fourth quarter of €201 million, equating to organic growth of +7% from €199.1 million last year. Revenue derived from the UK equated to 5% of company revenue during the fourth quarter. Annual revenue increased by +3% to €769.6 million, on an organic basis. 

Increased organic revenue was also reported in Spain & Portugal, equating to 6% of company revenue, rising from €190.9 million in Q4 2012 to €256.9 million in Q4 2013, an increase of +4% in terms of constant currency. During 2013 revenue rose to €896.9 million, equating to organic growth of +2% from €781.7 million in 2012. 

Q4 revenue from ‘Other European Countries’ increased organically during Q4 2013 by +14% to €328.9 million, up from €237.2 million a year ago. Other European Countries contributed 8% to total company revenue. Italian revenue grew by +7% led by growth in the industrial segment. Revenue from Switzerland grew by +2% following a strong performance by the company’s Inhouse segment. Austrian revenue increased, year-on-year, by +28% and reported notably improved profitability.

Polish revenue grew by +27%, driven by a strong performance across the entire business. In the Nordics revenue grew by +42%, following solid performances in Sweden and Norway. Revenue from the Czech Republic grew by +66%, while revenue in Hungary and Turkey remained under pressure.    

Annual revenue derived from ‘Other European Countries’ rose by +8%, on an organic basis, from €897.6 million to €1.1 billion.  

Randstad revenue derived from the ‘Rest of the World’ rose by +7% on an organic basis to €352.6 million, despite falling from €404.4 million last year. Revenue derived from the Rest of the World accounted for 8% of company revenue. Growth in Asia and Australia held up, but slowed across Latin America.

In Japan, quarterly revenue grew by +4% led by good performances in logistics and retail and good progress within Inhouse Services. Australian quarterly revenue grew by +7%, with strengthened temporary recruitment revenue and improved performances across a number of divisions. Chinese quarterly revenue grew by +48% based on strong performances across the whole business. In Latin America, the company’s Argentinean business came under pressure, driven by lower demand and deteriorating market conditions. The Brazilian business continued to grow but as a slower pace. Strong gross profit growth was reported in Mexico and Chile.  

On an annual basis, revenue from the ‘Rest of the World’ increased organically by +7% to €1.4 billion.

By business segment, Randstad’s Staffing business reported a -2% organic drop in revenue to €2.58 billion from €2.6 billion last year. During 2013, revenue fell organically by -5% to €10 billion down from €10.6 billion.

Randstad’s Inhouse Services business, which mainly focuses on industrial and logistical clients, reported organic growth of +15% to €878.4 million from €780.8 million, year-on-year. Annual revenue increased by +9%, on an organic basis, to €3.2 billion, up from €3 billion in 2012.

The Professionals business segment reported organic revenue growth of +2% to €821.3 million in Q4 2014 compared with a year ago. Annual revenue fell by -2%, in constant currency, to €3.3 billion down from €3.5 billion last year. 

Looking forward, Randstad at this stage does not see an acceleration of growth, but recent market data suggest the gradual recovery is likely to continue. Organic revenue per working day grew by +2.2% in Q4 2013. On a reported basis, revenue grew by +2.4% in January. Negative currency mix effects and fewer working days, more than offset the positive effect from the consolidation of USG. We expect a continued gradual improvement into the first quarter. The company highlighted that its business in North America has been impacted by inclement weather conditions in January and February 2014.

In trading today, the company’s share price fell by -8.3% to €45.11, an increase of +41.7% compared with a year ago. Based on the current share price, the company has a market value of €8.05 billion.  


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