Downturn Chills Europe's Recruiters, '09 Outlook Unclear
February 26 2009 - 11:14AM
Dow Jones News
Dutch recruiter Randstad NV (RAND.AE)swung to a net loss in the
fourth quarter, in part due to a charge on its takeover of rival
Vedior in 2008, as demand for both white and blue collar workers
declined.
The world's largest employment agency by sales after
Switzerland-based Adecco SA (ADEN.VX), said that visibility
remained low for the first quarter of 2009, and with revenue
rapidly decelerating it would even be challenging to maintain
targets for profit margins typical in downturns.
"The unprecedented fall in demand in Q4 2008 and January 2009
reflects the major economic difficulties our clients currently
face", Randstad CEO Ben Noteboom said in a statement.
The employment agency posted a net loss of EUR233 million from a
net profit of EUR118.5 million a year ago.
Revenue rose 63% to EUR3.96 billion from EUR2.43 billion,
boosted by the acquisition of the Vedior businesses which were
consolidated from May last year. Stripping out that acquisition,
revenue decreased 14%.
The company said that the contraction in its business started in
September and has accelerated since October. Rival Adecco's sales
fell 6% in the third quarter due to declining demand, and it said
it wouldn't meet its 2009 forecast. The company releases fourth
quarter and full year 2008 earnings March 4.
In the fourth quarter, Randstad's revenue fell sharply in all
its markets, especially France, the U.K. and Southern Europe. Its
staffing and in-house services were hit hardest, while its
healthcare and education divisions, which are less affected by the
economy, maintained growth.
The slowdown gathered pace in January, Randstad said. For
example, while revenue declined 10% in October 2008, revenue per
working day decreased by about 24% in January 2009.
The downturn is taking a toll on jobs in the 16 countries now
sharing the euro, with the European Commission expecting the
euro-zone unemployment rate will climb to 9.3% this year from 7.5%
last year. In France, 90,200 workers lost their jobs in January,
the largest ever monthly jump. In the U.K. number of people
claiming unemployment benefits rose 73,800 last month after
increasing a revised 79,900 in December.
Randstad said it booked a EUR500 goodwill impairment on its
Vedior business, the integration of which is on track, and expects
to book an extra EUR25 million restructuring charge in the first
quarter for its French operations.
Randstad acquired Dutch rival Vedior in May 2008 in a EUR3.2
billion deal.
Randstad Chief Financial Officer Robert-Jan van de Kraats told
Dow Jones Newswires that the EUR500 million impairment was based on
a worst-case scenario for the staffing sector in coming years.
Analysts said Randstad's results were broadly in line with
expectations, even though revenues declined faster than expected.
Both rate Randstad at hold.
Separately, specialist U.K. recruitment company Hays PLC
(HAS.LN), said demand for permanent placements was continuing to
weaken across all regions, though temporary placements were proving
more resilient. The company's net profit fell 20.25% in the fiscal
first-half year, which ended Dec. 31 to 70.6 million pounds
(EUR79.54) from GBP84.9 million the previous year.
Company Web Site: www.randstad.com
-By Maarten van Tartwijk; Dow Jones Newswires; +31 20 571 5201; maarten.vantartwijk@dowjones.com