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Gross profit up almost 8% YoY for Randstad in Q2 2017

Randstad has released its results for the second quarter of 2017.

Organic revenue per working day grew by 9.3% in Q2 to €5,866m (Q1 2017: up 6.4%). Reported revenue was 14.8% above Q2 2016, of which FX accounted for 0.2% and M&A contributed 7.5%, while working days had a negative effect of 2.2%.

In North America, revenue per working day increased 1% (Q1 2017: up 1%). Growth in the US remained flat, while Canada grew by 9% (Q1 2017: up 6%). In Europe, revenue per working day grew by 11% (Q1 2017: 8%). Topline growth in France amounted to 14% (Q1 2017: 9%), and the Netherlands grew by 2% (Q1 2017: 1%). Germany was up 9% (Q1 2017: 9%), while sales growth in Belgium improved to 14% (Q1 2017: 10%). Italy accelerated to 29% (Q1 2017: 23%), while revenues in Iberia were up by 16% (Q1 2017: 8%). In the 'Rest of the world' region, revenue increased 12% (Q1 2017: up 9%); Australia & New Zealand rose by 14% and Japan increased by 6%.

Perm fees grew 7% (Q1 2017: up 11%), with Europe up 13% (Q1 2017: 16%) and North America up 3% (Q1 2017: 6%). In the 'Rest of the world' region, perm fee growth was flat (Q1 2017: 8%). Perm fees made up 9.9% of gross profit.

In Q2 2017, gross profit amounted to € 1,194m. Organic growth was 7.9% (Q1 2017: 6.4%). Currency effects had a positive impact on gross profit of €3m compared to Q2 2016.

Gross margin was 20.4%, +150bp above Q2 2016. Temporary staffing had a negative impact of -40bp due to mix, pricing and an adverse working day effect, which is a reversal of Q1 2017. Permanent placements had a -10bp effect on gross margin, while HRS/others (including acquisitions) added +210bp.

On an organic basis, operating expenses increased by €14m sequentially to €932m. This is primarily related to the previously announced extra marketing investments for Monster and investments in its organic sales growth. Compared to last year, operating expenses were up 5% (Q1 2017: 7%) organically, while there was a €2m adverse FX impact.

Underlying EBITA increased organically by 7% to €262m, impacted by fewer working days. The quarter was also impacted by continued investments in its digital strategy including Monster (extra marketing). Currency effects were €1m positive YoY. EBITA margin reached 4.5%, down from 4.7% in Q2 2016. Excluding Monster and the adverse working day impact, EBITA margin was 5.0%. We achieved an organic incremental conversion ratio (ICR) of 34% over the last four quarters.

"In Q2, our organic sales growth accelerated to the highest level since 2011, driven by double-digit growth in Europe," said Randstad CEO, Jacques van den Broek (pictured). "Also momentum in the Rest of the world region improved versus Q1, while growth in our North American business was stable. We are satisfied with the progress of our acquisitions and remain very excited about their future contribution to the Group. Supporting people and organizations in realizing their true potential is Randstad's role in society. We are committed to go above and beyond to make our candidates and clients successful. To this end we are working hard on our digital transformation. This is showing the first good signs in margin development in our Dutch Professionals business as technology supports our consultants, as well as in our French perm business, by providing additional services through better insights based on big data."

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