Randstad Q4 2016 GP growth up over 2% YoY, but UK perm down 9%
Randstad has released its fourth quarter 2016 results, showing that revenue and profits were steady globally, but there were marked weaknesses in certain regions, including the UK.
Overall, organic revenue per working day grew by 6.6% in Q4 to € 5,525 million (Q3 2016: up 4.2%). Reported revenue was 10.6% above Q4 2015, of which FX made up −0.3%. Working days had an adverse impact of 1.7%, while M&A contributed 6.0%.
Revenue per working day in the UK was up 2% compared to the prior year (Q3 2016: up 1%). Overall perm fee growth was down 9% in Q4 (Q3 2016: down 4%). EBITA margin declined to 2.1% from 3.6% last year, partly driven by lower accrual releases.
In North America, revenue per working day was stable at 1% (Q3 2016: up 1%). Growth in the US remained flat (Q3 2016: 0%), while Canada grew by 4% (Q3 2016: up 5%). In Europe, revenue per working day grew by 8% (Q3 2016: up 5%). The Netherlands grew by 2%, similar to Q3 2016, and France accelerated to 10% (Q3 2016: 5%). Germany rose by 10% (Q3 2016: 5%), while topline growth also improved markedly in Iberia, with growth of 10%, while Italy grew by 26%. In the 'Rest of the world' region, revenue per working day was up 10% (Q3 2016: up 8%). Australia/New Zealand accelerated to 12% growth and Japan increased by 5%.
Perm grew by 4% (Q3 2016: up 7%), with Europe up by 11% and North America down by 3%. In the 'Rest of the world' region, perm fee growth was up 4%, led by Latam and Japan. Perm fees made up 1.8% of revenue and 9.5% of gross profit (Q4 2015: 9.7%), excluding the RPO business and Monster.
In Q4 2016, gross profit amounted to €1,106 million. Organic growth per working day was 5.5% (Q3 2016: 3.3%). Currency effects had a negative impact on gross profit of € 2 million compared to Q4 2015. Gross margin was 20.0%, +110bp above Q4 2015. Temporary staffing had a negative impact of −40bp, which was due to mix and pricing effects. Permanent placements had a negligible effect on gross margin, while HRS/ others (including Monster) added +150bp.
Underlying EBITA rose organically by 4.2% to € 268 million. Monster's contribution to EBITA was € 4 million. Currency effects had a negative impact of € 1 million year-on-year in Q4. The EBITA margin came in at 4.8% (4.9% excluding Monster), down 10bp versus Q4 2015. On a full-year basis, underlying EBITA margin improved from 4.5% to 4.6%.
Revenue grew by 6.6% in Q4. In January, revenue grew by 5%−6%. Randstad said that volumes in early February indicate a continuation of the trend. The Gross margin in Q1 2017 is expected to decline slightly year-on-year (on an organic basis). The business said that for Q1 2017, it expects largely stable underlying operating expenses sequentially (on an organic basis).
In North America, revenue growth was 1% year-on year (Q3 2016: up 1%). Perm fees were down 3% (Q3 2016: flat). In Q4 2016, our combined US businesses were flat (Q3 2016: flat), with US Staffing/Inhouse growing by 2% (Q3 2016: up 2%). US Professionals revenue was down 4% (Q3 2016: down 3%).
In Canada, revenue was up 4% (Q3 2016: up 5%), remaining ahead of the market. Underlying EBITA margin for the region increased from 5.6% last year to 5.8% in Q4 2016.
In the Netherlands, revenue was up 2% year-on-year (Q3 2016: up 2%). Overall perm fee growth was 13% (Q3 2016: up 26%). Our Staffing and Inhouse businesses grew 3% (Q3 2016: up 3%), with growth impacted by price pressure. Our Professionals business declined 8% (Q3 2016: down 4%). EBITA margin in the Netherlands was 6.7%, similar to last year.
In France, revenue growth accelerated to 10% (Q3 2016: 5%). Staffing and Inhouse revenue increased 9% (Q3 2016: up 4%). Our Professionals business accelerated to 17% (Q3 2016: 11%), driven by healthcare and Expectra. Perm fees were up 21% compared to last year (Q3 2016: up 31%). EBITA margin was 5.5%, compared to 5.2% last year.
In Germany, revenue per working day was up 10% year-on-year (Q3 2016: up 5%), ahead of the market. Our combined Staffing and Inhouse businesses were up 10% (Q3 2016: up 4%), while Professionals was up 11% (Q3 2016: up 8%). Underlying EBITA margin in Germany declined to 4.4%, compared to 5.6% last year, driven by a much lower release in holiday accruals this year, fewer working days, and a higher sickness rate.
In Belgium & Luxembourg, revenue per working day grew by 5% (Q3 2016: up 5%). Our Staffing/Inhouse business grew 5% (Q3 2016: up 5%), while the Professionals business was up 10% (Q3 2016: up 11%). EBITA margin improved to 7.6%, from 6.5% last year, supported by a higher release of social security accruals.
In Iberia, revenue growth improved further, and was up 10% (Q3 2016: up 6%), with Staffing/Inhouse combined growing 10% (Q3 2016: up 6%). Spain was up 12% (Q3 2016: up 6%), and our focus on permanent placements in Spain (up 13%) continues to pay off.
In Portugal, revenue improved by 7% (Q3 2016: up 7%). Overall underlying EBITA margin was 5.5% in Q4 2016, compared to 5.2% during the same period last year.
Across 'Other European countries', revenue per working day grew by 20% (Q3 2016: up 10%). Italy, Poland and Switzerland outpaced market growth. In Italy, revenue growth was 26% (Q3 2016: up 15%). In Poland, sales growth accelerated to 14% (Q3 2016: up 9%). Revenue in our Swiss business was up 23% year-on-year (Q3 2016: 12%). In the Nordics, revenue declined by 1% (Q3 2016: down 11%). Overall EBITA margin was 4.6% (Q4 2015: 4.4%).
Overall revenue in the 'Rest of the world' region grew 10% organically (Q3 2016: up 8%). In Japan, revenue grew by 5% (Q3 2016: up 5%). Revenue in Australia/New Zealand grew by 12% (Q3 2016: up 8%), and China accelerated to 28% growth year-on year (Q3 2016: up 3%). Our business in India grew by 4% (Q3 2016: flat), while Latin America was stable, with growth of 20% (Q3 2016: up 22%), driven by Argentina and Brazil. Overall, EBITA margin in this region improved to 2.1%, from 1.5% last year.
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