UPDATE: Randstad Earnings Improve As Recovery Gains Momentum

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

Randstad NV (EU:RAND)
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