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Q2 2012: gradual slowdown continues Reports Randstad Holding

Q2 2012: gradual slowdown continues Reports Randstad Holding

Key points Q2 2012

• revenue up 10% to &euro 4,303.1 million organic growth1per working day -/-0.8% (0% in June).

• North America up 7%, Rest of the World up 6% and Europe -/-4%

• gross margin at 18.2%, 0.2% below last year

• operating expenses2 at &euro 647.5 million, up &euro 9.7 million versus Q1 2012 including &euro 4 million currency effects

• underlying EBITA2,3 of &euro 134.9 million, with an EBITA margin at 3.1% (Q2 2011: 3.9%)

• leverage ratio at 2.4, reflecting seasonality in cash flow and dividend payment

• diluted EPS4 from &euro 0.59 to &euro 0.51 per ordinary share

Ben Noteboom, CEO Randstad: “We still see a mixed picture in an uncertain environment, illustrated by growth in North America, Asia and Latin America and a gradual slowdown in Europe. Our colleagues in the USA and Japan did particularly well this quarter, growing both revenue and profit. We continue to closely monitor the efficiency and productivity in our business. Our focus is on profitability above market share, and on stringent cost control. We have great confidence in the ability of our people to adjust and adapt as needed, as we have recently seen in the Netherlands and Germany. We welcome the changes in the collective labor agreements in these countries which enable our clients to maintain flexibility, while protecting the rights of our candidates.”


In Q2 2012 revenue increased by 10% to &euro 4,303.1 million. On a like-for-like basis, reflecting the consolidation of SFN, revenue per working day was down 0.8% (Q1 2012: 0%), based on 0.6 fewer working days. Last year growth per working day gradually slowed from 15% in Q1 to 11% in Q2. The net effect of disposals (primarily in Germany, India and Japan) was 0.5% and currency effects had a positive impact of 3.1%.

Revenue per working day contracted by 1.0% in April and 1.5% in May, while it was flat in June. The trend in May was impacted by the unfavorable timing of a number of public holidays, including Labour Day (May 1), in most European countries. Bridging days between weekends and the public holidays also have impacted our growth.

Perm fees declined by 9% (Q1 2012: -/-1.5%) and made up 1.8% of revenue and 9.7% of gross profit. Good growth was maintained in perm fees across North America, China, Germany and Spain. Revenue from other services, such as payroll services, managed services and recruitment process outsourcing, maintained strong double-digit growth.

North Americagrew by 7% per working day compared to 8% in Q1 2012. In Europe, revenue per working day declined by 4% (Q1 2012: -/-3%). Across most European countries seasonal patterns remained visible. In France (-/-3%), the Netherlands (-/-1%) and Germany (-/-2%) the decline in revenue remained limited, while in other European countries the year-on-year decline was a bit higher than in Q1 2012. Australian revenue was broadly in line with last year. Revenue growth strengthened across Asia, where Japan maintained strong performance, and Latin America.

Inhouse services grew by 15%, or 3% adjusted for the reclassification of SFN’s on-site business where we implemented the inhouse services concept. Staffing revenue contracted further, mainly influenced by lower demand in the industrial segment across Europe. Professionals grew by 1% (Q1 2012: 5%), led by North America.


In Q2 2012 underlying EBITA decreased by 12% to &euro 134.9 million, with an EBITA margin of 3.1% (Q2 2011: 3.9%). On a like-for-like basis the EBITA in Q2 2011 would have been &euro 164.0 million or 3.8% of revenue. Currency effects added &euro 3.5 million to EBITA.

We see good progress in North America, Japan, Asia and Latin America, yet the gradual slowdown in Europe creates a different geographic mix. Additionally, as diverging trends persist, our business mix is less geared towards white collar and professionals than would be expected. We have also witnessed increasing gross margin pressure in a number of countries, such as the Netherlands and Germany. As a result, we have reinforced our focus on costs, while aiming at profitability instead of market share gains. Our field steering approach ensures adaptability of the field organization, while we will closely monitor productivity and the efficiency of the whole organization, including overhead and head office costs. We will continue to invest in those activities where growth continues and we will adjust the organization where necessary, as we recently announced in the Netherlands and Germany. At the same time we will focus on client profitability by optimizing our delivery models, enhancing our pricing policies and terminating contracts if needed.


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