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Randstad North American revenue falls 1% on organic basis

April 30 2014

Randstad Holding NV, the world’s second-largest staffing firm, reported North American revenue fell 1 percent on an organic basis in the first quarter to €850.9 million (US$1.17 billion) when compared to the first quarter of the previous year. Inclement weather conditions in the U.S. during January and February impacted results, according to the company.

Organic growth excludes the impact of currencies, acquisitions, disposals and reclassifications. Randstad also adjusted organic revenue growth by number of working days. North American revenue fell 5 percent when not measured organically.

Randstad reported revenue in its combined U.S. staffing and inhouse businesses grew by 1 percent per working day, driven by a strong performance in March. Growth in perm fees was strong at 12 percent, and performance in the blue-collar segment was also good. The administrative segment remained behind, mainly due to low demand in the banking and finance segment. Randstad’s inhouse offering in the administrative segment showed strong growth.

Randstad reported its U.S. professionals businesses contracted by 2 percent per working day in the first quarter. Gross profit decreased by about 4 percent organically, mainly reflecting a change in business mix, higher medical claim costs, pension costs and wage taxes.

The company said recent investments in its information technology business continue to pay off. Randstad’s IT solutions business performed well and achieved solid growth. Finance business fell 3 percent from last year, but gradually improved through the quarter, primarily driven by strength in perm.

Pharma and engineering businesses returned to growth in the first quarter. Overall perm fees in professionals rose 8 percent, driven by a strong performance in March.

Randstad Sourceright achieved good performance in MSP and RPO, according to the company, but this was offset by lower revenue in payroll services. Gross profit rose 8 percent as the business mix improved.

In Canada, market conditions remained challenging. Revenue fell by 5 percent per working day, mainly caused by lower temp revenue. Staffing and inhouse business fell 7 percent from the first quarter of the previous year, and revenue in professionals fell about 3 percent. Perm fees rose 5 percent. Profitability in Canada was impacted by investments made in the second half of 2013.

Looking at global results, first-quarter revenue rose 4 percent on an organic basis to €3.97 billion (US$5.46 billion).

Randstad’s first-quarter gross margin improved to 18.1 percent from 17.8 percent in the year-ago quarter.

“The gradual recovery set in motion in 2013 has continued into Q1, with North America returning to growth at the end of the quarter and a continuing, albeit slow, growth trend across most of our European markets,” said CEO Jacques van den Broek. “We are confident that this gradual recovery will continue.”

Randstad net income rose 85 percent €54.9 million (US$75.5 million).

Shares in Randstad closed down 3.20 percent to €41.90. The Netherlands-based firm has a market cap of €7.42 billion (US$10.20 billion).

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