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Randstad Results

Randstad has announced its third quarter performance 2008. Revenue amounted to 4.5 billion and EBITA margin is holding up well at 5.4% (vs. 5.5% pro forma), EBITA2 reached 242.4 million (-4%.). The Realization of synergies on schedule operating expenses 670.9 million, 4% lower than in the previous quarter.

In this challenging quarter we have done really well, says Ben Noteboom, CEO of Randstad. Our priorities this quarter were to drive our integration efforts in line with plans, and to manage the change in market conditions at the same time. Managing both is a challenge, and we have shown that we are up to it. The integration projects are on target, we now participate in many more client proposals than before, we maintained our margins, we controlled our costs where needed and we managed to grow our market share in several important markets. I am very proud of the way our people rose to the occasion.

Third quarter 2008 by geography

On an organic basis revenue declined 5% in the UK. The integration of Randstad and Select in the staffing segment is almost finalized. End markets in staffing and inhouse services remained weak. The professionals segment contracted slightly. Growth was generated in segments such as education and healthcare, while IT, finance/accounting and engineering were under pressure. Permanent placement fees were down 13%. EBITA was impacted by a cautious 5.2 million bad debt provision, primarily related to the bankruptcy of Lehman. Excluding this one-off, based on lower productivity, the EBITA margin amounted to 3.9%, compared to 5.2% in Q3 2007.

Whilst the French market slowed markedly during the quarter, we continued to outperform. Revenue decreased by 3% in Q3 2008. Staffing and inhouse services have been affected by reduced demand in predominantly the industrial sector, but to a certain extent in the clerical sector as well. In professionals, growth slowed in the accounting/finance and engineering segments, whilst continued growth in healthcare shows no correlation with the business cycle. Momentum in permanent placement was maintained with fee growth of 30%. Corrected for the one-off payroll tax benefit, the EBITA margin improved from 4.0% to 4.2%.

The Netherlands
Significant progress was made in the integration of Vedior Netherlands and Tempo-Team as well as Dactylo and Randstad, and at the same time we continued to outperform the market. Combined pro forma revenue declined 2%. After a long period of growth, revenue in inhouse services contracted slightly due to pressure in the industrial and logistical segments. The professionals segment continued to grow. Pricing remains healthy across the board. EBITA was maintained at a strong level, with the EBITA margin reaching 8.8%, compared to 8.7% in Q3 2007.

Our German business grew slightly. The staffing market is young and continues to develop structurally, but the cyclical component has a clear impact now. Organic growth amounted to 1%. Reduced demand during the quarter, especially in the large accounts segment including automotive, impacted revenue in staffing and inhouse services. In engineering we had moderate growth. Operating results were impacted by a prior year related social security provision for an amount of 8.3 million. Excluding this one-off the EBITA margin reached 8.9% compared to 9.7% in Q3 2007, as a
result of lower productivity.

Revenue in Belgium/Luxembourg came down by 3% organically. Market growth slowed, especially in the important industrial segment, while we also shed 2 large contracts earlier in the year. The rebranding process of Vedior Belgium into Tempo-Team has been largely completed. Offices have been rebranded and a media campaign has started at the end of September to raise brand awareness. The costs were managed well and operating results continued to be strong. The EBITA margin remained stable at 5.3%.

Organic revenue growth amounted to -4%, backed by continued strong performance (double digit growth) of the Select and Vedior businesses in Portugal. The Spanish staffing market is affected by the slowdown in the Spanish economy and showed a pronounced decline. Next to preparation for the integration there is a strong and successful focus on productivity management. In a difficult environment the EBITA margin improved from 4.1% to 4.3%.

Other European countries
Growth in the other European countries slowed but remained positive on average. We realized good growth in countries such as Italy, Norway, Hungary, Turkey, Greece and Cyprus.

North America
Revenue declined by 8% on an organic basis. Demand for staffing remained low while inhouse services was impacted by lower revenue per client and ongoing effects from client losses earlier in the year, while new clients ramp up slowly. Professionals revenue was down slightly. Strong performance was maintained in healthcare, IT and engineering, offset by reduced demand in finance/accounting and negative phasing of projects in legal. The Canadian operations slowed down but maintained slight growth. Due to good cost containment the EBITA margin was flat at 4.1%.

Rest of the world
Growth continued to be strong across our larger businesses in Latin America such as Mexico, Argentina and Chile. We also generated strong growth in the Emirates and in Asia. Within Asia especially China and India were strong. Within India we are in the process of integrating Team4U and Ma Foi. In Australia we generated limited growth, backed by a relatively good performance in the industrial sector as well as in education.


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