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Revenue up 5% in Q2 2018 for Randstad

Randstad has released its results for the second quarter of 2018.


Organic revenue per working day grew by 5.0% in Q2 to €6,022m resulting in revenue of € 6,022m (Q1 2018: up 7.4%). Reported revenue was 2.7% above Q2 2017, of which working days had a positive effect of 0.6% while FX had a negative effect of 3.0%.


In North America, revenue per working day increased 2% (Q1 2018: up 1%). Growth in the US was up 2% (Q1 2018: flat), while Canada was flat YoY (Q1 2018: up 7%). In Europe, revenue per working day grew by 5% (Q1 2018: up 9%). Topline growth in France amounted to 3% (Q1 2018: up 10%) impacted by tougher comparables, while the Netherlands grew by 4% (Q1 2018: up 5%). Germany was up 6% (Q1 2018: up 7%), while sales growth in Belgium was 7% (Q1 2018: up 9%). Italy grew by 10% (Q1 2018: up 19%), while revenue in Iberia was up by 3% (Q1 2018: up 11%), with both countries significantly impacted by tougher comparables. In the 'Rest of the world' region, revenue increased 11% (Q1 2018: up 11%); Japan increased by 9% (Q1 2018: up 11%), while Australia & New Zealand rose by 7% (Q1 2018: up 6%).


Perm fees grew by 14% (Q1 2018: up 13%), with Europe up 17% (Q1 2018: up 15%) and North America growing 6% (Q1 2018: up 8%). In the 'Rest of the world' region, perm fees growth accelerated to 19% (Q1 2018: up 12%). Perm fees made up 10.9% of gross profit.


In Q2 2018, gross profit amounted to €1,191m. Organic growth was 2.9% (Q1 2018: up 4.5%), impacted by adverse mix effects related to Monster. Currency effects had a negative impact on gross profit of €44m compared to Q2 2017.


Gross margin was 19.8%, 60bp below Q2 2017. Temporary staffing had a 30bp negative effect on gross margin (Q1 2018: down 30 bps), primarily given adverse mix effects and changes in CICE in France. Permanent placements had 10bp positive effect on gross margin, while HRS/others had a negative impact of 40bp, mostly related to Monster and FX.


On an organic basis, operating expenses increased by €6m sequentially to €908m. This is primarily related to investments in our organic sales growth (including digital), partially offset by the cost optimization program within Monster. Compared to last year, operating expenses were up 2% (Q1 2018: up 2%) organically, while there was a €36m positive FX impact.


Underlying EBITA increased organically by 10% to €283m. Currency effects had a €8m adverse impact YoY. EBITA margin reached 4.7%, 20 bps higher than Q2 2017.


In Q2 2018, net finance income was €9m, compared with €8m net finance costs in Q2 2017. Interest expenses on our net debt position were €4m (Q2 2017: €5m). Foreign currency and other effects had a positive impact of €13m (Q2 2017: negative impact of €3m).


In Q2 2018, adjusted net income rose by 23% YoY to €223m. Diluted underlying EPS amounted to €1.21 (Q2 2017: € 0.98). The average number of diluted ordinary shares outstanding remained almost stable compared to Q2 2017 (183.8m versus 183.9m).


"We delivered a strong operating performance in Q2," said CEO, Jacques van den Broek (pictured). "Our organic sales growth came in at 5%, offsetting high comparable growth rates in Q2 2017. Our perm growth further accelerated to 14%. Randstad Sourceright and the Rest of the world region generated double-digit topline growth and significantly higher profitability. These businesses have further improved our global presence and resilience. All in all, we improved our margin conversion for the Group by maintaining the right balance between investing in growth and focus on profitability. Our digital strategy is making strong progress in laying digital foundations and scaling up best practices around the world. The global roll-out of digital initiatives such as workforce scheduling, data-driven sales and talent engagement is in full swing, with the first showing the most promising results. Wherever I travel and meet our people, I see a lot of excitement on our digital transformation and the positive effects it has on their jobs."


In North America, revenue growth was up 2% (Q1 2018: up 1%). Perm fees grew 6% (Q1 2018: up 8%). In Q2 2018, revenue of our combined US businesses was up 2% (Q1 2018: flat). US staffing/inhouse services grew by 5% (Q1 2018: up 2%). US professionals revenue was down 1% (Q1 2018: down 3%). In Canada, revenue was flat (Q1 2018: up 7%). EBITA margin for the region came in at 5.5%, compared to 6.1% last year, impacted by temporary effects.


In the Netherlands, revenue was up 4% YoY (Q1 2018: up 5%). Overall perm fees were up 5% (Q1 2018: down 6%). Randstad’s staffing and inhouse services businesses grew 2% (Q1 2018: up 4%), with growth still impacted by a strong focus on client profitability. Its professionals business was up 15% (Q1 2018: up 8%). Underlying EBITA margin in the Netherlands was 5.8%, stable compared to last year.


In France, revenue growth was 3% (Q1 2018: up 10%), impacted by tougher comparables and strikes. Perm fees were up 21% compared to last year (Q1 2018: up 38%). Staffing/inhouse services revenue grew 2% (Q1 2018: up 10%). Our Professionals business was up 10% (Q1 2018: up 13%), driven by Expectra and healthcare. EBITA margin was 5.2% compared to 6.4% last year, reflecting the adverse impact of the CICE change and slower growth.


In Germany, revenue per working day was up 6% YoY (Q1 2018: up 7%) and ahead of market, albeit still negatively impacted by regulation changes. Perm fees were up 29% compared to last year (Q1 2018: up 14%). The company’s combined staffing and inhouse services business was up 6% (Q1 2018: up 6%), while professionals was up 7% (Q1 2018: up 9%). EBITA margin in Germany was 4.6%, compared to 4.2% last year.


In Belgium & Luxembourg, revenue was up 7% (Q1 2018: up 9%), still ahead of the market. Perm fees were up 35% compared to last year (Q1 2018: up 47%). Its staffing/inhouse services business was up 7% (Q1 2018: up 9%), while the professionals business was up 8% (Q1 2018: up 8%). Randstad’s EBITA margin was 6.8%, up from 6.5% last year. Revenue per working day in Italy grew by 10% compared to the prior year (Q1 2018: up 19%), impacted by tougher comparables and client profitability focus. Overall perm fees were up 44% (Q1 2018: up 63%). EBITA margin improved to 6.1%, from 5.8% last year as we continue to balance growth and profitability.


In Iberia, revenue increased 3% (Q1 2018: up 11%), impacted by tougher comparables. Perm fees were up 17% compared to last year (Q1 2018: up 14%). Staffing/inhouse services combined grew by 3% (Q1 2018: up 11%). Spain was up 4% (Q1 2018: up 13%) while the company’s focus on permanent placements (up 18%) continues to pay off. In Portugal, revenue was down 1% (Q1 2018: up 6%). Overall EBITA margin was 5.2% in Q2 2018, compared to 5.1% last year.


Across 'Other European countries', revenue per working day grew 6% (Q1 2018: up 11%), reflecting tougher comparables. In the UK, revenue was up by 7% (Q1 2018: up 7%), while perm fees were down by 4% (Q1 2018: down 14%). In the Nordics, revenue increased by 4% on an organic basis (Q1 2018: up 11%). Revenue in its Swiss business was up 13% YoY (Q1 2018: up 22%). Overall EBITA margin for the 'Other European countries' region was 2.4% compared to 2.6% last year.


Overall revenue in the 'Rest of the world' region grew by 11% organically (Q1 2018: up 11%). In Japan, revenue grew 9% (Q1 2018: up 11%). Revenue in Australia/New Zealand grew 7% (Q1 2018: up 6%), while revenue in China grew by 7% YoY (Q1 2018: up 5%). Randstad’s business in India was up 2% (Q1 2018: down 1%), while in Latin America revenue grew 35% (Q1 2018: up 32%), driven by Argentina and Brazil. Overall EBITA margin in this region was 5.0%, compared to 2.6% last year, primarily driven by a strong profitability increase in Japan and Australia. The copmany achieved record earnings in Japan, Singapore and China. global businesses Overall revenue growth per working day was up 3% YoY organically (Q1 2018: flat). Randstad Sourceright continued to deliver double-digit revenue growth, while Monster sales growth was down by 16% (Q1 2018: down 16%). Overall EBITA margin came in at 0.8% compared to -2.3% last year, reflecting improved results in both Sourceright and Monster.


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