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Hudson reports mixed results in Q2 2016

Hudson Global has today reported its financial results for the second quarter ended 30th June 2016.

 

On a reported basis, revenue of $113.1m declined 7.9% from the second quarter of 2015 or 4.2% in constant currency. On a retained basis, revenue declined 0.3% but increased 4.1% in constant currency.

 

On a reported basis, gross margin of $46.8m declined 6.7% from the second quarter of 2015 or 4.0% in constant currency. On a retained basis, gross margin declined 2.4% but increased 0.7% in constant currency.

 

There was a net loss of $3.1m, or $0.09 per basic and diluted share, compared with net income of $13.9m, or $0.41 per basic and diluted share, for the second quarter of 2015.

 

Adjusted EBITDA resulted in a loss of $0.7 million, including $2.5 million of compensation and legal fees related to an arbitration with the company's former chairman and chief executive officer, compared with adjusted EBITDA loss of $0.1 million in the second quarter of 2015.  Adjusted EBITDA in second quarter 2016 would have been positive excluding the arbitration expense.

 

"We are encouraged by the continued gross margin growth in many of our markets, including Australia, New Zealand, Belgium, France and Spain," said Stephen Nolan, chief executive at Hudson. "Amidst variable economic conditions around the globe, demand was strong for our services in Temporary Recruitment and Talent Management in particular, with continuing gross margin growth in RPO."

 

Regional Highlights

 

Europe

Hudson Europe's gross margin increased 2 percent in constant currency on a reported basis from the second quarter of 2015, and 5 percent on a retained* basis. Growth was driven by Continental Europe, with gross margin higher by 12 percent reported and 19 percent retained* in constant currency, with double-digit growth in Belgium, France and Spain.  In the U.K., 15 percent gross margin growth in RPO was offset by a 15 percent decline in recruitment. EBITDA was $1.6 million in the second quarter, compared with $3.4 million a year ago, the difference principally due to the company's divestiture of its Netherlands business in April 2015.  Adjusted EBITDA was $2.3 million, or 4.9 percent of revenue, in the second quarter of 2016, compared with adjusted EBITDA of $1.1 million, or 2.1 percent of revenue a year ago.

 

Americas

In the second quarter, Hudson Americas' gross margin decreased 37 percent on a reported basis compared with the second quarter of 2015 and decreased 8 percent on a retained* basis in constant currency. RPO gross margin declined in the second quarter due primarily to a project completion in 2015, after delivering 18 percent growth in the first quarter of 2016.  EBITDA was a loss of $0.2 million in the second quarter, compared with a gain of $15.4 million a year ago, principally due to the company's divestiture of the US IT business in June 2015.  The region delivered adjusted EBITDA loss of $45 thousand for the second quarter, compared with a loss of $0.2 million a year ago, as the region benefitted from lower SG&A expenses.

 

Asia Pacific

Hudson Asia Pacific's gross margin decreased 2 percent in constant currency on a reported basis in the second quarter of 2016 from the same period in 2015. Gross margin growth in Australia/New Zealand of 13 percent was more than offset by a 26 percent decline in Asia, driven by softer conditions in China, compared with the second quarter of 2015. RPO delivered gross margin growth of 10 percent, driven primarily by Australia, up 26 percent from new business and higher volume at existing clients. EBITDA was $0.6 million in the second quarter, compared with a loss of $0.6 million a year ago.  Asia Pacific delivered an adjusted EBITDA of $1.3 million, or 2.0 percent of revenue, down from adjusted EBITDA of $2.0 million, or 3.5 percent of revenue, in the second quarter of 2015. Adjusted EBITDA in Australia/New Zealand increased by $0.8 million against prior year due to the growth in RPO and recruitment, offset by declines in Asia.

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