UPDATE: Randstad Earnings Improve As Recovery Gains Momentum
April 28 2010 - 5:22AM
Dow Jones News
Dutch staffing group Randstad Holding NV (RAND.AE) Wednesday
reported its first-quarter earnings swung back into the black as
revenue showed signs of improvement and it said that it sees a
broad-based recovery in all of its markets.
Randstad, the second-largest staffing agency by sales behind
Switzerland's Adecco SA (ADEN.VX), said that "prospects for the
near future are better than they have been for quite some time" and
that it sees an uptick in all of its regions and segments.
In the first quarter, Randstad's revenue trend improved, with
the rate swinging from a contraction of 5% in January to an
increase of 4% in March. Although these trends continued into
April, Randstad warned that they don't guarantee sustainable growth
even though "they do provide confidence."
The upbeat outlook echoed comments by U.S. peer Manpower Inc.
(MAN), which said last week that the recovery will continue into
the second quarter as companies need more temporary staff to
respond to increased demand.
It indicates that global staffing markets may have put the worst
behind them after suffering a deep slump in the past year as
companies cut back on hiring or laid off staff in response to the
downturn.
"Staffing activity is picking up and the recovery is gaining
momentum," said KBC Securities analyst Margo Joris in a note to
investors. Joris added that Randstad's top-line was a positive
surprise and noted that, for the first time since the beginning of
the downturn, the company recorded sales growth in North America,
Germany and France, which is "psychologically important." Joris
upgraded the stock to buy from hold.
Investors welcomed the news. At 0806 GMT, Randstad shares traded
up 1.2% at EUR40.74, the biggest riser in the AEX market in
Amsterdam, which traded down 1.2%. The stock has gained about 15%
in value this year compared to a 4% rise in the AEX, as investors
hope that the early-cycle staffing sector will be the first to
benefit from an economic recovery.
Diemen-based Randstad Wednesday posted net profit of EUR20
million in the first quarter of 2010 from a net loss of EUR54.2
million. The bottom line benefited from a 20% drop in operating
expenses to EUR499.6 million. Revenue fell 1% to EUR3.04 billion
from EUR3.1 billion.
Earnings before interest tax and amortization, or Ebita
excluding one-off items, rose 53% to EUR75.4 million, beating
analyst expectations of EUR71.5 million.
In an effort to cope with the slump, Randstad has been cutting
costs since early 2008 and was able to realize additional savings
through the integration of Vedior, a Dutch rival it acquired that
year. Cost reductions were accelerated as the recession started to
gain pace, with Randstad cutting branches and personnel.
-By Maarten van Tartwijk, Dow Jones Newswires; +31 20 571 5201;
maarten.vantartwijk@dowjones.com
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