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Revenues up over 8% YoY for Randstad

Randstad has released its results for the fourth quarter and full year 2017.

Organic revenue per working day grew by 8.7% in Q4 to € 5,978m (Q3 2017: up 9.0%) despite a 2.4% tougher comparison base. Reported revenue was 8.2% above Q4 2016, of which M&A contributed 3.0%. FX and working days had a negative effect of 2.7% and 0.8% respectively.

In North America, revenue per working day increased 1% (Q3 2017: flat). Growth in the US was flat, while Canada grew by 10% (Q3 2017: up 6%). In Europe, revenue per working day grew by 11% (Q3 2017: up 11%). Topline growth in France amounted to 12% (Q3 2017: up 14%) reflecting tougher comps, while the Netherlands grew by 3% (Q3 2017: up 1%). Germany was up 10% (Q3 2017: up 10%), while sales growth in Belgium improved to 10% (Q3 2017: up 9%). Italy grew by 26% (Q3 2017: up 27%) despite much tougher comps, while revenues in Iberia were up by 15% (Q3 2017: up 14%). In the 'Rest of the world' region, revenue increased 10% (Q3 2017: up 10%); Australia & New Zealand rose by 8% (Q3 2017: up 9%) and Japan increased by 9% (Q3 2016: up 6%).

Perm fees accelerated to 13% (Q3 2017: up 10%), with Europe up 18% (Q3 2017: up 18%) and North America up 5% (Q3 2017: up 2%). In the 'Rest of the world' region, perm fee growth was 14% (Q3 2017: up 5%). Perm fees made up 8.8% of gross profit. gross profit In Q4 2017, gross profit amounted to € 1,202m. Organic growth was 7.9%2 (Q3 2017: up 7.7%). Currency effects had a negative impact on gross profit of € 31m compared to Q4 2016.

In Q4 2017, gross profit amounted to € 1,202m. Organic growth was 7.9% (Q3 2017: up 7.7%). Currency effects had a negative impact on gross profit of € 31 million compared to Q4 2016.

Gross margin was 20.1%, 10bp above Q4 2016. Temporary staffing (Q3 2017: -40bp) and permanent placements had no effect on gross margin, while HRS/others (including acquisitions) added 10bp.

On an organic basis, operating expenses increased by € 8m sequentially to € 895m. This is primarily related to investments in our organic sales growth (including digital), partially offset by the cost optimisation program within Monster. Compared to last year, operating expenses were up 5% (Q3 2017: 5%) organically, while there was a € 25m positive FX impact.

Operating expenses in Q4 2017 were adjusted for a total of € 11m one-offs, of which € 7m is derived from restructuring expenses related to prior M&A (primarily Monster) and € 4m relates to other restructuring costs. Last year's cost base was adjusted for a total of € 36 million one-off costs.

Underlying EBITA increased organically by 14% to € 307m. Currency effects had a € 5m adverse impact YoY. EBITA margin reached 5.1%, up from 4.8% in Q4 2016. Excluding digital investments and the adverse working day impact, EBITA margin was 5.4%.

In Q4 2017, adjusted net income rose by 11% YoY to € 225m. Diluted underlying EPS amounted to € 1.22 (Q4 2016: € 1.10). The average number of diluted ordinary shares outstanding remained almost stable compared to Q4 2016 (184.0m versus 183.8m).

At the end of Q4 2017, net debt was € 1,026m, compared to € 793m at the end of Q4 2016. A further analysis of the cash flow is provided in the next section. The leverage ratio was 0.9, compared to 0.8 in the previous year, impacted by M&A announced in 2016 and completed in 2017. The syndicated credit facility allows a leverage ratio of up to 3.5, while we set ourselves a maximum leverage ratio of 2.

"We look back on another exciting year for Randstad," said Randstad CEO, Jacques van den Broek (pictured). "Our revenue rose organically by 8% in 2017, the highest level of growth since 2011 and we are proud to have outperformed in most relevant markets. We finished the year on a strong note, despite markedly tougher comparables. Our organic sales growth remained robust at 9% in Q4, while our profitability and FCF increased substantially. We aim to gain further market share, driven by our differentiating Tech & Touch strategy, lifting the barriers to entry. We are integrating technology into our everyday activities in such a way that we create experiences for our clients and candidates that are smart, personal and effective. The digital transformation we are going through as a company culminated in the launch of our new brand promise in the last quarter of 2017: Human Forward. Our financial position remains healthy, reflected by the proposal of a cash dividend of € 2.76 per ordinary share, including a special dividend of € 0.69, a record high. I feel very proud of all my colleagues and I would like to thank them and all stakeholders for an excellent 2017."

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