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Randstad sees steady global growth in Q2 2016

Randstad announced a gross profit increase of 2.4%, as it released its second quarter 2016 results this morning.


The company announced revenue of € 5,108m and organic growth of 3.1%, as it revealed good growth in Europe, confirming topline growth of 4%.


The company fared well in the rest of the world, with equal topline growth of 4%, however topline growth in North America stalled at 0%.


Gross margin was up 20bp YoY to 18.9% and perm fees were up 11%.


It recorded a 10% growth in underlying EBITA at €240m (+10%) and confirmed its EBITA margin was up 20bp to 4.7%; L4Q ICR of 53%.


Its adjusted net income is up 12% to € 170.9m and ROIC is at 17.9% (vs. 15.1% last year). Its DSO improved to 50.7 (from 51.2 in Q2 2015); leverage ratio of 0.7 and it had a L4Q EBITA margin of 4.6% (+30bp YoY).


Randstad said the acquisitions of Obiettivo Lavoro (Italy), Careo (Japan), and twago (digital), announced in the quarter, had significantly boosted the business’s presence in Italy and Japan.


It added that M&A activity announced in H1 will add €1.5 billion in revenues (incl. Proffice and Ausy) on an annualised basis.


"In Q2, growth continued in Europe, while revenue in the US stabilized; these trends appear to be continuing into July," said Randstad CEO Jacques van den Broek. "M&A activity has been high: with the acquisition of Obiettivo Lavoro, we have achieved a No. 2 position in the Italian market, while by acquiring the Careo Group, we have doubled our presence in Professionals in Tokyo. The acquisition of twago, a digital platform, enables us to take a big step in the freelance market."


Results by country below.


North America

In North America, revenue was stable year-on-year (Q1 2016: up 3%). Reported revenue was 2% below Q2 2015. Perm fees grew 1%. In Q2 2016, revenue of our combined US businesses was stable (Q1 2016: up 3%). US Staffing/Inhouse grew by 1% (Q1 2016: up 6%). US Professionals revenue was down 2% (Q1 2016: 0%). In Canada, revenue was up 2% (Q1 2016: flat), ahead of a challenging market. Underlying EBITA margin for the region increased from 5.9% last year to 6.1% in Q2 2016.



In the Netherlands, revenue was up 3% year-on-year (Q1 2016: up 6%), impacted by the decline of government payrolling and a difficult comparison base. In addition, price pressure continued. Overall perm fees were up 18% (Q1 2016: down 19%). Our Staffing and Inhouse businesses grew 2% (Q1 2016: up 6%). Excluding the lost payroll revenue, our Staffing/Inhouse business was up 8%. Our Professionals business grew 11% (Q1 2016: up 5%). Underlying EBITA margin in the Netherlands was 5.5%, compared to 6.5% last year.



In France, revenue growth was 4% (Q1 2016: 9%), impacted by the strikes (negative effect of approximately 2%) . Staffing and Inhouse revenue increased 3% (Q1 2016: up 8%). Our Professionals business was up 10%, again driven by strong performance in our healthcare business. Perm fees were up 37% compared to last year (Q1 2016: up 27%). Our underlying EBITA margin was 5.9%, compared to 5.6% last year.



In Germany, revenue per working day was up 5% year-on-year (Q1 2016: up 5%). Our combined Staffing and Inhouse business was up 4% (Q1 2016: up 5%), while Professionals was up 7% (Q1 2016: up 8%). Underlying EBITA margin in Germany improved to 5.0%, compared to 4.6% last year.


Belgium & Luxembourg

In Belgium & Luxembourg, revenue was down 2% (Q1 2016: down 3%), impacted by the loss of some large accounts (partially driven by our focus on client profitability), and by the terrorist attack at Brussels Airport. Our Staffing/Inhouse business was down 2% (Q1 2016: down 2%), while the Professionals business was up 6% (Q1 2016: down 6%). Our undelying EBITA margin moved up to 6.3%, from 5.4% last year.



In Iberia, revenue increased 5% (Q1 2016: up 8%). Spain was up 5% (Q1 2016: up 9%), with Staffing/Inhouse combined growing 5% (Q1 2016: up 9%) and Professionals up 5%. Our focus on permanent placements (up 42%) continued to pay off. In Portugal, revenue improved by 5% (Q1 2016: up 4%). However, our focus on perm (up 62%) and client profitability has helped push gross profit growth to 17%. Overall underlying EBITA margin was 4.5% in Q2 2016, compared to 3.8% in the same period last year.


United Kingdom

Revenue per working day in the UK was stable compared to the prior year (Q1 2016: up 1%). Gross profit was down 2% (Q1 2016: up 2%). Overall perm fees were down 5% year-on-year (Q1 2016: up 2%). Underlying EBITA margin continued to improve and is now 3.0% (up from 2.0% last year).


Other European countries

Across 'Other European countries', revenue per working day grew 9% (Q1 2016: up 10%). This was supported by solid growth continuing in Italy, which was up 12% (Q1 2016: up 11%). In Poland, revenue growth continued, reaching 13% (Q1 2016: up 11%). Revenue in our Swiss business was up 10% year-on-year (Q1 2016: 5%). In the Nordics, on an organic basis, revenue was down 7% (Q1 2016: flat). The Proffice acquisition (consolidated as of February 4) added € 108.5 million in revenue in Q2, as well as € 4.5 million to EBITA. Overall EBITA margin for the 'Other European countries' region was 3.9% (Q2 2015: 3.3%).


Rest of the world

Overall revenue in the 'Rest of the world' region grew 4% organically (Q1 2016: up 5%). In Japan, revenue grew 4% (Q1 2016: up 3%). Revenue in Australia/New Zealand grew 4% (Q1 2016: up 5%), while revenue in China grew 16% year-on-year (Q1 2016: up 6%). Our business in India was down 1% (Q1 2016: up 5%), while in Latin America revenue grew 6% (Q1 2016: up 10%), driven by Argentina and Chile. Overall EBITA margin in this region was 1.9%, compared to 0.6% last year.


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