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Randstad beat expectations in Q1 22 with strong organic revenue growth (+15.2%) and an underlying EBITA margin of 4.3% of revenue (+0.6pt). Randstad benefited from a positive pricing environment and a favorable mix of services. Organic growth was spread across all the geographic areas and categories of services. Volumes in early April 22 indicate the continuation of the positive trend. In Q2 22, the gross margin and operating expenses are expected in line sequentially.
Companies: Randstad NV
In Q4 21, strong organic revenue growth (+16.3%) was attributable to North America (+14%), Europe (+15%) and the Rest of the world (+20%). The underlying EBITA margin improved by 0.4pt to 5% of revenue. In 2021, Randstad had a good set of figures (+20% organic growth, underlying EBITA margin of 4.4% of revenue, free cash flow of €590m). The proposed dividend is above expectation at €5.0/share (ordinary and special dividend). It is a high return to shareholders of €920m.
Organic growth complemented by bolt-on acquisitions, the EBITA margin improvement and an attractive return to the shareholders are still on the agenda. Randstad has been a well-managed company under the head of the CEO Jacques van den Broek who will retire in March 2022. He will be replaced by Sander van’t Noordended who has spent a large part of his career at Accenture. His experience is interesting with the aspect of digital.
Randstad beat the consensus in Q3 21. Organic revenue surged by +20.7% on the back of the favourable economic environment. Q3 21 organic revenue exceeded Q3 19 by 5%. The underlying EBITA margin improved to 4.7% of revenue (+0.8pt) thanks to a higher gross margin and good control of operating expenses. The momentum remains positive in early October 2021 vs the situation in September 2021 (6% above September 2019). Lastly, Randstad announced a change in the CEO for March 2022.
In Q2 21, organic revenue surged by 38% and was above the Q2 19 level by 3%. The resumption of the activities was attributable to all geographic areas: +23% in North America, +46% in Europe, +20% in the rest of world. The underlying EBITA margin reached 4.3% of revenue (+2.8pts) thanks to a higher gross margin and an increase in the operating expenses at a lesser pace than revenue growth. Volume in early July 2021 shows continued positive momentum.
In Q1 21, organic revenue growth was strong (+6.4%) and was up in all geographic areas (+5% in North America, +6% in Europe, +11% in the rest of world). Growth was driven by staffing and in-house services. The underlying EBITA margin improved by 0.7pt to 3.7% of revenue. The short-term outlook remains positive as volumes in April 2021 are approaching the 2019 levels.
Q4 20 was better than expected. Organic revenue decreased by 3.6% (of which +1% in North America, -5% in Europe, -1% in the Rest of World) and the underlying EBITA margin was 4.6% of revenue (-0.3pt). In 2020, the strong free cash flow (€1,132m) included positive effects from the CICE receivables in France sold to third-parties (€265m) and the COVID-19 governmental measures (€120m). The proposed dividend with respect to FY20 is above expectations. The recovery in activities continued in January
Randstad beat the consensus in Q3 20 with a decrease in organic revenue of 13% and an underlying EBITA margin of 3.9% of revenue (-1.1pt). Randstad performed well in North America, the Rest of world and Italy, all where the decrease in organic revenue was below the group average. Randstad had a strong free cash flow thanks to the positive impact of the CICE subsidy collection in France.
In Q2 20, organic revenue dropped by 25% (less than the consensus expected) and the EBITA margin before integration costs and one-offs (1.5% of revenue) beat the consensus. In addition, the group had strong free cash flow. The group benefited from cost management, low WCR and the governmental measures implemented in several countries. According to management, July indicates further positive momentum vs June 2020 (-21%) and the second half of March 2020 (-30%) and April 2020.
In Q1 20, organic revenue decreased by 7% (o/w -10% in Europe) reflecting -3% to -4% in January/mid-March 2020 then -30% since mid-March. It is an indicator for Q2 20 as North America and other countries in the ROW entered into the COVID-19 and lockdown cycle in April. The underlying EBITA margin was solid thanks to cost measures and the first governmental measures related to COVID-19. Free cash flow did not deteriorate and the net debt/EBITDA ratio was rather stable (1.1x).
In Q4 19, organic revenue per working day was down 2.8%, including a significant decrease in the Netherlands, Germany, and Sweden. The gross margin rate was solid at 20% of revenue (+0.2pt) thanks to a positive price/mix in temporary staffing and the underlying EBITA margin decreased to 4.9% of revenue (-0.3pt) due to higher investment in IT. The good surprise is the payment of a dividend of €4.32/share (+28%) (above expectation) including a special dividend of €2.23/share.
Randstad Holding is progressing in its digital strategy which aims to be a differentiator in the market. The group emphasised the improvement of its geographic diversification but it has a large exposure to European countries. The target is to expand faster in North America and Japan where there are strong growth potentials and returns on investment higher than the group average. Cost savings of €120m by 2021 should help to improve the EBITA margin in the medium term.
Organic revenue was down in Q3 19 (-2.5% vs -1.7% in Q2 19, +0.5% in Q1 19), still affected by automotive in Europe and a negative turnaround in the US due to less demand in the industry. In this context, the group had an honourable ‘underlying’ EBITA margin (5.0% of revenue, -0.1pt) coming from good gross margin development in temporary staffing. At this stage, Q4 19 should be more or less similar to Q3 19 at best.
In Q2 19, organic revenue decreased (-1.7% vs +0.5% in Q1 19) due to Europe (70% of revenue), specifically the automotive sector which impacted Germany (-15%), Belgium and the Netherlands to a lesser extent (respectively -4% and -3%). In this context, the ‘underlying’ EBITA margin remained robust (4.7% of revenue, -0.1pt) thanks to the improvement in the gross margin (+0.2pt to 20% of revenue).
Q1 19 was better than expected. Randstad Holding posted slight organic revenue growth (+0.5%) in a tougher economic environment than last year (+7.4% in Q1 18). In Europe (68% of the total), the trend of the activities improved in Q1 19 in France (0%), Italy (+1%) and Spain (+3%) vs Q4 18 (respectively -4%, -1%, -3%). The ‘underlying’ EBITA margin improved slightly (+0.1pt to 4% of revenue) thanks to a positive price/mix in temporary staffing and operating costs kept under control.
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