UPDATE: Randstad More Upbeat Even As Profit Misses Views

Dutch staffing group Randstad Holding NV (RAND.AE) Thursday posted lower-than-expected fourth-quarter net profit, but signaled increased confidence in an economic recovery as markets stabilized.

"Our markets have stabilized and classical recovery patterns are visible," said Chief Executive Ben Noteboom. He added that "if recovery continues we should do very well."

That recovery so far has been uneven. It is apparent in the industrial sector in France, Germany and the U.S., Chief Financial Officer Robert-Jan van de Kraats told Dow Jones in an interview, but in the Netherlands, its home market, which accounts for about 23% of revenue, there was no sign of an upturn.

"The rate of decline is improving strongly," said van de Kraats. "We've seen this trend now for two quarters."

Randstad said the recovery remains fragile, but it is facing the coming quarters with increased confidence.

The Diemen-based company swung to a net profit of EUR46 million in the fourth quarter of 2009 from a net loss of EUR233 million a year earlier when it was burdened by a non-cash goodwill impairment of EUR500 million related to its acquisition last year of Dutch rival Vedior NV. Analysts had expected a EUR54.6 million net profit for the period.

Revenue at the second-largest staffing agency by sales behind Adecco SA (ADEN.VX) dropped 20% to EUR3.18 billion from EUR3.96 billion, below analysts' forecasts of EUR3.22 billion.

Organic revenue per working day fell 18% in the final quarter of 2009. During the quarter, the revenue trend improved, with the rate of decline moving from a contraction of 21% in October to a contraction of 13% in December. In January, revenue per working day declined 5% organically, and the improving trend continued into the first two weeks of February.

Global staffing markets have shrunk in the past year as companies cut back on hiring or laid off staff in response to the downturn. Randstad has been cutting costs since early 2008 and was able to realize additional savings through the integration of Vedior. Cost reductions were accelerated as the recession started to gain pace, with Randstad cutting branches and personnel.

In the current environment, Randstad won't cut costs further.

Operating expenses excluding restructuring and integration costs fell 22% to EUR499.8 million. The figure was in line with the EUR500 million Randstad had said it hoped to achieve. Earnings before interest, tax and amortization, or Ebita excluding one-off items, was down 39% to EUR106.1 million, below analysts' expectations of EUR116.8 million. The company's Ebita margin was 3.3% in the fourth quarter, while Randstad targets a margin of 4%.

The company scrapped its full-year dividend for the second year in a row, citing its leverage ratio.

Its net debt to earnings before interest, tax, depreciation and amortization, or Ebitda, stood at 2.5 times at the end of the fourth quarter, above its target of between zero and 2 times.

"We, therefore, aim to further reduce debt and propose that no ordinary dividend is paid for 2009," the company said in a statement.

Net debt stood at EUR1.01 billion at the end of 2009, compared with EUR1.64 billion a year earlier.

"We have ample capacity to benefit from renewed growth in all major global markets. Whether it is in staffing, in managed services or in the placement of professionals, we have an excellent position from which to start building again, and our new Randstad group is ready for the future," Noteboom said.

At 1334 GMT, Randstad shares traded down EUR0.42, or 1.3%, at EUR32.58, while the benchmark AEX index traded up 0.2%.

-By Robin van Daalen, Dow Jones Newswires; +31-20-5715200; robin.vandaalen@dowjones.com

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