Randstad Q3 revenue slips 5.9% organically, plans to acquire Zorgwerk
Randstad Q3 revenue slips 5.9% organically, plans to acquire Zorgwerk
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Randstad (RAND: NV), the world’s largest staffing firm, reported organic revenue per working day was down 5.9% year-on-year in Q3 2024, bringing Q3 revenue to €6.01 billion.
Reported revenue was down 3.9% year-on-year. From a reported point of view, working days had a negative impact of 1.5%, while currency effects had a positive impact of 0.2%. M&A & other negatively contributed 0.6%.
At the main geographical segment level, revenue per working day in North America was down 9% on an organic basis. In Northern Europe, revenue per working day was down 8% organically, while in Southern Europe, the UK and Latin America, revenue was down 2% on an organic basis. In the Asia Pacific region, revenue was down 5% organically.
Randstad today also announced that it will acquire Zorgwerk, a healthcare staffing platform in the Netherlands. Randstad aims to strengthen its specialised offering in the healthcare and care sector.
CEO Sander van ‘t Noordende said in a press release, “Whilst the challenging macroeconomic environment persisted over the quarter, trading conditions stabilised across some of our markets. We have continued to focus on execution and operational discipline, balancing field capacity with strategic investments in growth segments and our Partner For Talent strategy.”
“Finally, this is the first set of results since the passing of our founder, Frits Goldschmeding,” van ‘t Noordende continued. “Frits was an iconic entrepreneur who put people at the heart of everything. We will continue to grow and innovate Randstad in Frits’ spirit and in line with our core values as defined by him: ‘to know, to serve, to trust’.”
Underlying EBITDA, adjusted for integration costs and one-offs, was down 28% to €196 million. According to Reuters, this was slightly above the €192 million expected by analysts on average in a company-provided consensus. On a revenue basis, the performance was behind that of ManpowerGroup which reported a constant currency decline of 1.8% for Q3 last week.
(€ millions) | Q3 2024 | Q3 2023 | Change | Organic Change |
Revenue | 6,015 | 6,260 | (4%) | (6%) |
Gross Profit | 1,172 | 1,293 | (9%) | (10%) |
Gross Margin | 19.5% | 20.6% | - | - |
Underlying EBITA | 196 | 273 | (28%) | (29%) |
Operating Profit | 167 | 245 | (32%) | - |
Net Income | 106 | 170 | (38%) | - |
In Q3 2024, reported gross profit amounted to approximately €1.17 billion (Q3 2023: €1.29 billion), down 9%, year-on-year. Gross profit was adjusted for € 4 million of one-offs (Q3 2023: €0 million), resulting in an underlying gross profit of €1.17 billion, down 10% year-on-year, organically. Currency effects had a negligible impact on gross profit compared to Q3 2023.
EBITA was €179 million (Q3 2023: € 257 million). EBITA was adjusted for €17 million of integration costs and one-offs (Q3 2023: € 16 million), resulting in an underlying EBITA of €196 million (Q3 2023: € 273 million), which means an organic decline of 29%.
From a reported point of view, currency effects had a positive impact of 1%, year-on-year. Underlying EBITA margin reached 3.3% in the quarter.
Revenue by Geography
(€ millions) | Q3 2024 | Q3 2023 | Organic Change |
North America | 1,183 | 1,310 | (9%) |
Netherlands | 736 | 780 | (7%) |
Germany | 419 | 467 | (11%) |
Belgium/Luxembourg | 400 | 406 | (4%) |
Other NE Countries | 350 | 376 | (10%) |
Northern Europe | 1,905 | 2,029 | (8%) |
France | 903 | 946 | (7%) |
Italy | 542 | 517 | 3% |
Iberia | 491 | 408 | 6% |
Other SE Countries, UK & Latam | 394 | 415 | (6%) |
Southern Europe, UK & Latin America | 2,330 | 2,286 | (2%) |
Asia Pacific | 597 | 635 | (5%) |
Revenue | 6,015 | 6,260 | (6%) |
Unless otherwise stated, revenue growth below is year-on-year and on an organic basis.
North America
In North America, revenue was down 9%. The group said it saw sequential improvement while its transformation is ‘well underway’. In Canada, the group cited challenging conditions.
Revenue of the combined US businesses was down 9%. US Operational talent solutions was down 3%. US Professional talent solutions was down 20%. US Digital talent solutions was down 14%, while US Enterprise talent solutions was down 11%. In Canada, revenue was down 10%. EBITA margin for the region came in at 3.6% for the quarter, compared to 5.2% last year.
Northern Europe
Across Northern Europe. In the Netherlands, revenue was down 7%. Operational talent solutions was down 8%, while the Professional talent solutions segment was up 1%. The company cited a stabilising market and an adverse automotive impact. EBITA margin in the Netherlands was 5.3%, compared to 6.0% last year.
In Germany, revenue was down 11%. Operational talent solutions was down 12%, while Digital talent solutions was down 3%. EBITA margin in Germany was 1.2%, compared to 4.7% last year, reflecting ongoing tough market conditions.
In Belgium and Luxembourg, revenue was down 4%. Operational talent solutions was down 5%, while Professional talent solutions was up 3%. EBITA margin was 4.3%, compared to 3.9% last year. In Belgium, Randstad said there was a tougher comparison but added that it saw continued strong adaptability.
Across other Northern European countries, revenue per working day was down 10%. Revenue in Poland was down 4%. In the Nordics, revenue was down 22%, while in Switzerland, revenue was down 7%. EBITA margin for other Northern European countries was 3.1% compared to 2.9% last year. Overall, Randstad saw mixed trends in Northern Europe.
Southern Europe, UK & Latin America
In France, revenue was down 7%. Operational talent solutions was down 4%, while the Professional talent solutions was down 10%. EBITA margin was 3.9% compared to 5.2% last year. Randstad said macroeconomic and political challenges weighed on recovery.
Revenue in Italy was up 3%. Operational talent solutions was up 2% YoY, while Professional talent solutions was up 10%. EBITA margin was 5.5%, compared to 6.8% last year. In Italy, the group said it invested in further growth.
In Iberia, revenue per working day was up 6%. Operational talent solutions was up 7%. Spain was up 10%, while in Portugal revenue was down 9%. EBITA margin was 6.2%, compared to 6.1% last year.
Across other Southern European countries, UK & Latin America, revenue per working day was down 6%. In the UK, revenue was down 11% amid a challenging market. In Latin America, revenue was up 2%, with Brazil notably up 13%. EBITA margin in this region was 2.3% compared to 3.1% last year.
Asia Pacific
Total revenue in the Asia Pacific region was down 5% organically. In Japan, revenue was up 4%. Japan saw strong profitability and continued investments.
Operational talent solutions was up 1%, while Digital talent solutions was up 23%.
Revenue in Australia/New Zealand was down 14%, while the business in India was up 8%. Overall EBITA margin in this region was 4.8%, compared to 5.0% last year. Tough conditions remained in Australia and New Zealand, the group noted.
Revenue by specialisation
(€ millions) | Q3 2024 | Q3 2023 | Organic Change |
Operational talent solutions | 4,014 | 4,064 | (4%) |
Professional talent solutions | 934 | 1,010 | (10%) |
Digital talent solutions | 704 | 788 | (11%) |
Enterprise talent solutions | 334 | 355 | (8%) |
Monster (see below re disposal) | 29 | 43 | 0% |
Total revenue | 6,015 | 6,260 | (6%) |
Permanent fees decreased by 15% year-on-year on an organic basis. Total revenue of permanent placements amounted to €117 million in Q3 2024. RPO fees decreased organically by 2% year-on-year (Q2 2024: down 19%). Revenue from recruitment process outsourcing amounted to €81 million in Q3 2024 (Q3 2023: €75 million). Perm and RPO fees made up 16.4% of gross profit.
In its outlook, Randstad said in the first weeks of October, it saw stable volumes as compared to the quarter (Q3), and the group expects to benefit from easier comparables as it moves into Q4.
Q4 2024 gross margin is impacted by the Monster disposal of approximately 50 basis points sequentially. Randstad expects gross margin to be underlying slightly higher sequentially. Q4 2024 operating expenses are impacted by the Monster disposal of approximately €35-40 million sequentially. Q4 2024 operating expenses are expected to be underlying stable sequentially.
When asked about the upcoming US elections, van‘t Noordende told Reuters, “getting the elections behind us is the most important thing”, as Randstad’s clients will benefit from clarity about the economic climate and “start adjusting their strategies.”
Earlier this month, Jesus Echevarria, Chief Client and Talent Officer was appointed as Chief Operating Officer for Randstad, replacing Chris Heutink effective 1 January 2025.
On the acquisition of Zorgwerk, van ‘t Noordende said, “We are excited to welcome the Zorgwerk team and its extensive network of qualified and dedicated healthcare and care professionals to Randstad.”
“As part of our strategy, we are focused on growing segments and leveraging digital marketplaces to create more personalised and efficient engagements with clients and talent. By combining Randstad and Zorgwerk, we can serve the broadest set of needs of our healthcare clients across all types of work arrangements to help address the critical challenges of the healthcare and care industry where talent scarcity is most pronounced,” van ‘t Noordende said.
Daniëlle van der Burg, CEO of Zorgwerk, added, “With Randstad, we have found a strong partner who supports our growth ambitions. Our culture revolves around talent and clients, with innovation and the improvement of our business processes at the core. This combination will allow us to build a leading and respected position in the healthcare talent industry. Together with Randstad, I see great potential to further enhance our strategy, accelerate our growth and offer great advantages to society.”
Zorgwerk specialises in mediating talent for the healthcare and care industry. With 26 years of experience and operating from a single office in Rotterdam, Zorgwerk serves multiple sectors, including homecare, elderly care, disability care, mental health care, childcare, social welfare and hospitals. Zorgwerk also runs an in-house academy to empower talent.
The transaction is subject to consultation with employee representative bodies, and its completion is subject to clearance by the Netherlands Authority for Consumers and Markets (ACM). The parties aim to complete the transaction in the coming period.
Randstad Holding shares last traded at €44.09, up 2.18% on the day and 10.03% above the 52-week low of €40.07 set on 5 August 2024. The company has a market cap of €7.80 billion.