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Randstad reports Q4 organic gross profit increase of over 5%

“2014 was a successful year, especially with accelerating growth in North America and the Netherlands, and stable overall trends in Q4. The growth in January 2015 is also encouraging, especially as France seems to improve," says Jacques van den Broek, CEO of Randstad. “Our growth rate in permanent placements remains solid and the attention to commercial activities is paying off. A job well done by our people across the globe. I trust that we will be able to further improve as a company, and we are in excellent shape to face any future challenges.”

The company has released a summary of its results.


Organic revenue per working day grew by 3.4% in Q4 compared to 4.2% in Q3. The reported revenue was 5.1% above Q4 2013. This was primarily driven by a favorable currency effect of 1.6%.

Revenue growth went from 4.0% in October to 2.8% in December, and we achieved 6.5% growth in January. The growth rate throughout the quarter was challenged by the comparison base, as the growth rate last year went from 1.3% in October to 2.9% in December. In addition, December was impacted by more bridging days this year (typically the days after national holidays), which count as working days but are generally considered less than fully productive. However, whilst the December growth rate is negatively impacted by these bridging days, January benefits.

In North America, revenue per working day was up 6% (Q3 2014: 5%). Growth accelerated throughout the quarter as we grew 8% in December, driven accross all US business lines. In Europe, revenue per working day grew by 1% (Q3 2014: 3%), impacted by the slowdown in France (down 8%), which was only partially compensated by the acceleration in the Netherlands (up 5%). In the 'Rest of the world' region, revenue per working day was up 15% (Q3 2014: 11%), and we continued to see progress in Australia (up 24%).

As a result of our strategic focus, perm fees grew by 21% (Q3 2014: 15%). In North America and Europe, perm fees grew by 18% and 21% respectively. In Asia, fee growth was 36%, led by Japan and China. In Australia, perm fees grew 33%. Perm fees made up 1.7% of revenue and 9.2% of gross profit (Q4 2013: 7.8%).

In Japan, revenue grew by 8% (Q3 2014: 6%). We continued to outperform the market, driven by growth in logistics and retail. ABFS (activity-based field steering) is paying off. Revenue in Australia grew by 24% (Q3 2014: 15%). Temp revenue accelerated further in Business Support and in the industrial segment. Perm fees were up 34% in the quarter (Q3 2014:

Gross profit

In Q4 2014, gross profit amounted to &euro 840.6 million. The organic change was 5% (Q3 2014: 6%). Currency effects had a positive impact on gross profit of &euro 15.4 million when compared to Q4 2013. The gross profit growth in January was 9%. Gross margin was 18.7%, 0.3% above Q4 2013.

The underlying temp margin was stable, although negatively impacted by the mix, which had a negative impact of 0.1% (Q3 2014: 0.1%). This was more than offset by perm fees, which added 0.3% (Q3 2014: 0.2%) and HRS/others, which added 0.1% (Q3 2014: 0.0%). In North America, the gross margin was higher due to a positive mix impact, as was the case in Europe. Last year's gross profit was adjusted for &euro 1.6 million restructuring costs, whilst this year's gross profit was adjusted by &euro 2.4 million.

Operating expenses

Operating expenses increased sequentially by &euro 16.7 million, which included an increase of &euro 8.2 million due to currency mix effects. Marketing costs increased &euro 4.2 million as a result of normal seasonal effects in our investments. Personnel expenses increased as a result of investments in headcount in countries or segments where growth continued, and due to seasonality. Compared to last year, operating expenses were up 0.3% organically. We maintained good cost control across the business. Average headcount (in FTE) amounted to 29,120 for the quarter, 1% higher than in Q3 2014 and 2% higher year-on-year. In North America, headcount was up 1% sequenitally due to investments in growth. In Europe, headcount also increased 1% sequentially as we added staff in those countries and segments where growth continued, such as Poland, Italy, Iberia and other Eastern European countries. Productivity (measured as gross profit per FTE) was 5% higher than last year (Q3 2014: 4%).

We operated a network of 4,411 outlets (Q3 2014: 4,376). This 1% sequential increase was the result of the continued expansion of our Inhouse presence, particularly in the Netherlands and North America. The operating expenses in Q4 2014 were adjusted for &euro 31.4 million in restructuring costs, primarily in the Netherlands and Germany. Last year's cost base was adjusted for a total of &euro 35.9 million in integration and restructuring costs.


Underlying EBITA increased organically by 25% to &euro 198.7 million. Currency effects had a positive impact of &euro 2.4 million. The EBITA margin reached 4.4%, up from 3.7% in Q4 2013. We achieved an incremental conversion ratio (ICR) of 96%. Looking at FY 2014, the underlying EBITA margin improved from 3.5% to 4.1%, while we achieved an ICR of 77%.

Amortization of intangible assets, impairment of goodwill, and badwill

Amortization of acquisition-related intangible assets amounted to &euro 36.8 million, in line with the level of previous quarters.

Net finance costs In Q4 2014, net finance costs reached &euro 12.5 million, compared to &euro 3.5 million in Q4 2013. Net finance costs include the net interest expenses on our net debt position, as well as currency effects and adjustments in the valuation of certain assets and liabilities. Interest expenses amounted to &euro 3.2 million, compared to &euro 6.2 million in Q4 2013. Foreign currency effects had a negative impact of &euro 8.1 million, compared to a gain of &euro 2.9 million in Q4 2013. The remaining negative effect of &euro 1.2 million (Q4 2013: &euro 0.2 million) was mainly due to adjustments in the valuation of certain assets and liabilities.


The full-year effective tax rate before amortization and impairment of acquisition-related intangibles and goodwill, badwill, integration costs, and one-offs, amounted to 30.1% (FY 2013: 31.7%). For 2015, we expect an effective tax rate of between 27% and 30%.

Net income, earnings per share

In Q4 2014, diluted underlying EPS amounted to &euro 0.68 (Q4 2013: &euro 0.58). Stock dividend and the exercise of stock options increased the average number of diluted ordinary shares outstanding by 1.6% compared to Q4 2013.


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