11 November 2019Reading time: 2 minutes

Randstad presented their third quarter results on October 22th. The organic revenue of the employment company declined in the third quarter with 2,5 percent on an annual basis to bit more than 6 billion euro. The net income ended at 140 million euro, which is 26 percent lower on an annual basis.

On the other hand, Randstad did maintain its margins. The gross profit increased with 30 basis points to 20,1 percent, while the EBIT-margin remained almost the same at 5 percent. The free cash flow of Randstad in the third quarter was 468 million euro, which is an increase of 113 percent on annual basis.

The declining organic revenue came as no surprise to investors and analysts. For a longer period of time, Randstad is facing headwinds in amongst others Germany and the United States.

The United States is by far the largest market for Randstad. The third quarter organic revenue in the US decreased with 1 percent on an annual basis to 1,1 billion euro. The recently presented American job report shows that the unemployment rate was 3,5 percent in September, which is the lowest rate since 1969. At the same time, the salary increase for 2019 in September was still just 2.9 percent, the lowest increase since July 2018. Economics and analysts are also concerned about the vulnerability of the American economy due to geopolitical tensions.

In Germany its especially the car industry that struggles. Therefor Randstad experiences less demand for employees from this sector. The revenue per working day plummeted on an annual basis with 14 percent.

In France, which is the largest European market for Randstad with a total third quarter revenue of 941 million euro, the results are under pressure. Here the organic revenue declined with 1 percent. The revenue per working day in the Netherlands declined on an annual basis with 5 percent in the third quarter. Figures from the ‘Centraal Bureau voor de Statistiek’ (CBS) showed that the Dutch unemployment rate has increased in the third quarter. In the Dutch labour market outflow has become larger than the inflow. It remains to be seen if this trend will progress in the following period.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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Vontobel products on Randstad are tradable at DEGIRO.


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31/10/2020 20:56:15