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Randstad sees underlying EBITDA fall 8% in Q4 2019

Randstad has released its results for the fourth quarter and full year 2019.


Organic revenue per working day declined by 2.8% in Q4 resulting in revenue of €5,995m (Q3 2019: down 2.5%). Reported revenue was down 1.7% YoY, of which working days had a negative effect of 0.3% while FX had a positive effect of 1.0%. M&A contributed 0.4%. For the full year, revenue was €23,676m, down 2% organically.


In Q4 2019, gross profit amounted to €1,201m. Organic growth was down 1.8% (Q3 2019: down 1.9%). Currency effects had a positive impact on gross profit of €13m compared to Q4 2018. Gross profit was down 1% organically for the full year, at €4,726m.


Underlying EBITA decreased 8% YoY (10% organically) to €292m in the fourth quarter. Currency effects had a €3m positive impact YoY. EBITA margin reached 4.9%, 30bp below Q4 2018, impacted by selective investments in digital/IT and growth areas. EBITDA also fell 8% to €977m for the full year.


In Q4 2019, adjusted net income was down 10% to €209m. Diluted underlying EPS amounted to €1.14 (Q4 2018: €1.27). The average number of diluted ordinary shares outstanding remained almost stable compared to Q4 2018 (184.1m versus 183.9m).


"In 2019, we solidified our global No. 1 position as the largest HR services firm in the world", says CEO, Jacques van den Broek. "This further strengthens our commitment and responsibility to support people and organizations in realizing their true potential. In fact, we see it as our core business. It has helped us to achieve our leading position, and it will help us in our journey towards our ultimate goal of touching the work lives of 500 million people by 2030."

“Financially, 2019 was a challenging year, but we have been able to demonstrate our resilience once again. Randstad's increasingly diversified portfolio by region and activity paid off. Our Group revenue was slightly down year-on-year organically, reflecting ongoing macro and political uncertainties, primarily in Northern Europe. At the same time, we continued our outperformance in several key geographies. Importantly, we were able to further improve our pricing power and discipline, reflecting increasing scarcity in labor markets and the successful implementation of our digital pricing tools globally. All in all, we protected our full-year 2019 EBITA margin, arriving at a sound level of 4.6%, while at the same time investing significantly in the future. Underpinning the strong resilience of our business model, we generated a record high free cash flow of € 915 million, resulting in a strong balance sheet and additional cash returns to shareholders. For 2019, we propose a record high total cash dividend of € 4.32 per ordinary share, including a special dividend of € 2.23. I would like to thank all Randstad colleagues around the world for their enthusiasm, commitment and dedication to this great company.”


In North America, revenue growth was down 2% (Q3 2019: down 1%). Perm fees were down 1% (Q3 2019: up 4%). In Q4 2019, revenue of Randstad’s combined US businesses was down 3% (Q3 2019: down 1%). US staffing/inhouse services declined by 5% (Q3 2019: down 4%). US Professionals revenue was up 1% (Q3 2019: up 2%). In Canada, revenue was up 1% (Q3 2019: up 3%). EBITA margin for the region came in at 6.0%, compared to 6.5% last year.


In France, revenue was up 1% (Q3 2019: down 1%), and ahead of market. Perm fees were up 4% compared to last year (Q3 2019: up 4%). Staffing/inhouse services revenue declined 2% (Q3 2019: down 4%), while the company’s professionals business was up 10% (Q3 2019: up 9%). EBITA margin was 6.6% compared to 5.9% last year.


In the Netherlands, revenue was down 10% YoY (Q3 2019: down 5%), impacted by lower activity in industrial-related sectors. Overall perm fees were down 5% (Q3 2019: down 18%). Randstad’s combined staffing and inhouse services business was down 11% (Q3 2019: down 6%), while its professionals business was up 1% (Q3 2019: up 3%). EBITA margin in the Netherlands was 6.4%, compared to 5.9% last year.


In Germany, revenue per working day was down 15% YoY (Q3 2019: down 14%), still negatively impacted by regulation changes and challenging macroeconomic conditions. Perm fees were down 34% compared to last year (Q3 2019: down 17%). Randstad’s combined staffing/inhouse services business was down 16% (Q3 2019: down 17%), while professionals was down 12% (Q3 2019: down 6%). EBITA margin in Germany was 1.4%, compared to 3.9% last year.


In Belgium & Luxembourg, revenue was down 3% (Q3 2019: down 4%). Perm fees were flat compared to last year (Q3 2019: down 23%). The company’s staffing/inhouse services business was down 5% (Q3 2019: down 5%). Its EBITA margin was 6.4%, compared to 5.7% last year.


Revenue per working day in Italy was down 1% compared to the prior year (Q3 2019: down 2%), still ahead of market. Overall perm fees were up 20% (Q3 2019: up 21%). EBITA margin was 6.7%, compared to 6.8% last year.


In Iberia, revenue per working day was up 1% YoY (Q3 2019: down 1%). Perm fees were down 5% compared to last year (Q3 2019: up 5%). Staffing/Inhouse Services combined was up 1% (Q3 2019: down 1%). Spain was up 4% (Q3 2019: up 1%), while in Portugal revenue was down 6% (Q3 2019: down 8%). Overall EBITA margin was 5.9% in Q4 2019, compared to 6.1% last year.


Across 'Other European countries', revenue per working day was down 1% (Q3 2019: down 1%). In the UK, revenue was down 2% (Q3 2019: down 2%), while in the Nordics, revenue was down 7% on an organic basis (Q3 2019: down 7%). Revenue in the company’s Swiss business was down 1% YoY (Q3 2019: flat). Overall EBITA margin for the 'Other European countries' region was 2.3% compared to 3.4% last year.


Overall revenue in the 'Rest of the world' region grew by 9% organically (Q3 2019: up 7%). In Japan, revenue grew 7% (Q3 2019: up 8%). Revenue in Australia/New Zealand was up 3% (Q3 2019: down 1%), while revenue in China grew by 24% YoY (Q3 2019: up 5%). The company’s business in India was up 13% (Q3 2019: up 19%), while in Latin America1 revenue grew 23% (Q3 2019: up 21%), primarily driven by Brazil and Mexico. Overall EBITA margin in this region was 3.8%, compared to 4.8% last year.


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