Randstad benefits from increasing demand for temporary employees

Randstad benefits from increasing demand for temporary employees

22 December 2017Reading time: 2 minutes

Randstad presented their 2017 third quarter results at the end of October. The recruitment company increased their revenue in this period with on an annual basis with 10% to EUR 5.87 billion, whereas the organic revenue growth was 9%. With a revenue growth of 11%, Europe was the top performing market for Randstad. This growth was supported by an organic revenue growth of 14% in France. Compared to other European countries, the Netherlands stayed behind with a revenue growth of 1%. The revenue growth in North-America stagnated.

The underlying operating results of Randstad increased in the third quarter with 6% on an annual basis to EUR 287.5 million, while the EBITDA margin moved from 5.1% to 4.9%. Altogether the net profit of Randstad declined with 7% to EUR 165.5 million. This is mainly due to higher amortization of intangible assets, which rose on an annual basis from EUR 16.3 million to EUR 33.6 million. Also the financing costs increased from EUR 4.4 million to 9.7 million. Randstad also claims that as a result of the acquisition of the vacancy website Monster, the integration costs and the one-off costs increased from EUR 11 million to EUR 27 million. It remains to be seen how high these costs will be in the upcoming quarters.

Randstad also announced that it wants to realize cost reductions of EUR 90-100 million annually, starting from 2019. Among other things this will be achieved by moving dozens of all the 206 physical locations from city centres to business parks in 2018. A part of these cost reduction yields will be invested in new digital projects. Randstad also expects to increase the EBITDA margin target in 2018 towards 5-6%, while this is now approximately 4.6%.

A positive development for Randstad is that the demand for temporary employees in the Netherlands is still growing due to the improving economy. Recent figures from the branch organisation ABU, show that temporary employees in period 10 (week 37-40) worked 6% more hours compared to the previous year. Because of this the revenue of recruitment companies increased in the same period with 7%. It remains to be seen if this growth of temporary employment will continue in the following period and how Randstad as a market leader will benefit from this.

The stock price of Randstad is now (13-12-2017) at EUR 52,09 and therefore at the same level as a year ago. In the meantime the stock price peaked at EUR 58.41 and reached an all-time low of EUR 48.10.

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23/03/2019 08:06:45