Randstad NV Reports Q3 Results

Shares of Randstad NV rose on Tuesday after posting third-quarter results that broadly aligned with market expectations.

At 3:08 am (0708 GMT), Randstad NV was trading 4.5% higher at €45.07.

The company’s underlying EBITA came in at €196 million, matching the consensus forecast of €195 million. This result was achieved before factoring in €17 million in one-off charges, mainly related to integration and restructuring efforts.

Organic revenue growth was recorded at -5.9%, slightly below the consensus estimate of -5.6%, reflecting ongoing challenges in the staffing industry.

While growth remains negative, the decline was less steep than in the previous quarter, which saw a 7.5% drop.

North America and several European markets, including Germany and the Netherlands, improved modestly compared to Q2, signaling some stabilization. However, France and Belgium showed no improvement.

On the positive side, Southern European markets like Italy and Iberia continued to deliver growth, with revenues up 3% and 6%, respectively.

The company’s gross margin landed at 19.5%, falling short of the expected 19.9%. The miss was attributed to a weaker temp staffing margin and a 15% drop in permanent placements.

However, Randstad’s tight control over costs helped offset some of this pressure. Selling, General, and Administrative expenses were €989 million, below the consensus forecast of €1,003 million, thanks to a 4% reduction in headcount over the past year.

Net debt, including lease liabilities, decreased to €1.37 billion from €1.57 billion in the prior quarter, reflecting a 13% drop in free cash flow to €258 million. A working capital inflow of £150 million helped support the balance sheet, despite lower EBITDA.

During the quarter, Randstad also acquired Zorgwerk, a Dutch digital healthcare staffing platform, for €323 million. The acquisition reflects the company’s strategy to expand its footprint in high-growth, tech-enabled segments.

The company noted that volume trends in October remain stable compared to Q3. Randstad expects to benefit from easier comparisons in Q4, though the recent sale of its Monster business will weigh on results.

The disposal is projected to impact gross margins by about 50 basis points. However, gross margin is still expected to improve slightly on a sequential basis, with consensus currently forecasting 20.2% for Q4, up from 19.5% in Q3. SG&A is expected to remain largely flat, barring some residual effects from the Monster sale.

RBC analysts maintain a "sector perform" rating on Randstad, citing the company’s effective cost control amid a challenging market. However, they note that better opportunities may lie with other staffing firms, such as Adecco (SIX:ADEN) and specialists in niche markets.