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Randstad NV reported its financial performance for the second quarter of 2021, revealing a decline in organic revenue but highlighting strategic advancements in digital and AI initiatives. According to InvestingPro data, the company maintains strong financial health with an overall score of 3.5 (rated as GREAT), supported by impressive revenue growth of 12.52% over the last twelve months. Despite market uncertainties, the company remains committed to operational excellence and cost optimization.
Key Takeaways
- Randstad’s Q2 revenue reached €5.8 billion, with an EBITDA margin of 3%.
- The company is enhancing its digital marketplace, with significant growth in AI skill demand.
- Operational excellence and cost optimization remain priorities, targeting €100 million in savings by 2025.
- Temporary work demand outpaces permanent hiring amid economic uncertainties.
Company Performance
Randstad’s Q2 performance reflected the ongoing challenges in the global market, with revenues reaching €5.8 billion and an EBITDA of €171 million. The company faced a 2.3% decline in organic revenue, indicating the impact of geopolitical and economic uncertainties. With a conservative beta of 0.29 and an attractive P/E ratio of 6.12, Randstad demonstrates resilience in volatile markets. The company continues to excel in digital business growth, particularly in North America, and maintains market leadership in regions like Belgium.
Financial Highlights
- Revenue: €5.8 billion
- EBITDA: €171 million
- EBITDA Margin: 3%
- Organic Revenue Decline: 2.3%
- Adjusted Net Income: €84 million
- Free Cash Flow: €82 million
- Leverage Ratio: 1.8
Outlook & Guidance
Looking ahead, Randstad anticipates persistent economic uncertainty. The company expects Q3 gross margins to decline similarly to Q2, by approximately 90 basis points. However, operating expenses are projected to be modestly lower, with a focus on profitable growth segments.
Executive Commentary
CEO Sander Vonnet Nordende emphasized the company’s strategic direction, stating, "We are becoming more specialized and more digital with a better experience for clients and talents." This focus on digital transformation and specialization is expected to enhance client engagement and operational efficiency.
Risks and Challenges
- Economic Uncertainty: Ongoing geopolitical tensions and economic fluctuations may impact client confidence and hiring trends.
- Market Saturation: Increased competition in the recruitment sector could pressure market share and profit margins.
- Cost Optimization: Achieving the targeted €100 million in structural savings by 2025 requires effective execution of cost-reduction strategies.
- AI Integration: Successfully integrating AI into service offerings poses both opportunities and challenges in terms of technology adoption and talent alignment.
Despite the challenges, Randstad’s strategic initiatives in digital transformation and cost optimization position the company for future growth and resilience in a dynamic market environment. With a solid current ratio of 2.69 and an attractive dividend yield of 6.08%, InvestingPro analysis suggests the company maintains strong fundamentals. For deeper insights into Randstad’s valuation and growth potential, investors can access comprehensive Pro Research Reports, available exclusively to InvestingPro subscribers, covering over 1,400 top stocks with expert analysis and actionable intelligence.
Full transcript - Randstad NV (RAND) Q2 2025:
Elba, Conference Moderator, Randstad: Hello. Welcome to the Randstad q two twenty twenty five results conference call and audio webcast. For the first part of the call, the participants will be in listen only mode. Afterwards, there will be a question and answer session.
If you wish to ask a question, please press pound key five on your telephone keypad. Please note that you are limited to one question and one follow-up question. I will now hand over the word to Mr. Sander Vonnet Nordende, CEO. Mr.
Vonnet Nordende, please go ahead.
Sander Vonnet Nordende, CEO, Randstad: Thank you very much, Elba, for that kind introduction, and good morning, everybody. I’m here with George and our Investor Relations team to share our Q2 results. The market environment in the second quarter was again influenced by geopolitical and economic uncertainty, which frankly, we and many of our clients see as the new normal. Against this backdrop, I’m pleased with the performance we delivered and the strategic progress we made. We achieved revenues of €5,800,000,000 an EBITDA of EUR 171,000,000 with a margin of 3%.
We continue to benefit from our focus on operational excellence and most importantly, we are seeing the benefits of our strategy coming through in our performance. We’ve seen a mixed picture across our markets with different trends and dynamics at play. We continue to live on to deliver good profitable growth in Italy and Spain. We had growth returning in APAC, where India and Japan are doing particularly well. We saw sequential improvement in North America with year over year growth in our operational and digital business.
Northwest Europe continues to face weakness in hiring confidence affecting permanent recruiting and our professional businesses the most. Looking ahead, we expect economic uncertainty to stay at current levels. In that context, client confidence will still be a challenge, and we might see more demand for temporary work and soft activity on the permanent hiring side. Of course, we are managing the business with operational discipline you expect from us, and we are staying extremely close to our clients and talents. In the meantime, we are building a better and stronger run set for the future.
As said in our capital markets event, we’ve been focused on executing our partner for talent strategy. Specialization at scale is now effect at Randstad. And this is important because specialization is key for our differentiation and our competitiveness in the marketplace. Clients want to talk to someone who understands their business. Talent wants to talk to someone who knows about their field.
And our people get the opportunity to focus their career on a specialization and do an even better job than they did before. And we know that this works. In RPO, for example, we see strong demands across our markets as more clients turn to us to be their dedicated partner for talent. We continue to win new clients, but equally important, we see more interested in recruiters on demand at existing clients. In digital, we see increased demand for AI skills, especially for GenAI and AgenTik AI capabilities.
In The US, we are ramping up AI related projects in financial services, health care, consumer goods, and technology. And we provide these AI roles from our global delivery center in India. Think about machine learning engineers, data scientists, and cloud engineers. We’re also becoming more and more digital first. In q two, more than 700,000 shifts were directly selected by the talent on our digital marketplaces, a double digit increase over q one.
We continue to build scale and specialization in our talent and delivery centers resulting in higher productivity and fulfillment. Focus works. So in summary, great progress and exciting work to be done. We’re becoming more specialized and more digital with a better experience for clients and talents. All in all, we’re absolutely on the right track.
George, over
George, CFO, Randstad: to you. Thank you, Sander, and good morning, everyone. So I’ll bring back a little bit. So last year, around this time, we talked about, let’s say, from q one to q two about the return of seasonality. And this year, we even see a step up.
So from Q1 to Q2, we saw a more pronounced return in seasonality, more employees working, more people at work compared to last year and at the group level. And therefore, our organic revenue declined by 2.3%, so not an inflection yet, but still an improvement of 2% versus Q1 even against slightly tougher comparables. Second, we’ll go through the results in more detail. But importantly, at the consolidated level, once again, like in Q1, our gross profit and OpEx were aligned, allowing us to protect relative profitability despite the lower top line. And like we discussed in the last CME, we see the impact of our strategic progress.
We see it in specialization and growth segments. We see it in Q2 with a step up in productivity in GPP fields, so basically being able to increase our productivity in the field and how we do it. And lastly, we see the impact of structural cost savings with a strong focus on indirect costs. Let’s see how this opens out in our results and starting with the page eight with North America. We saw good progress this quarter, like Sandra just highlighted.
In The US, in particular, our operational business grew 1% and continues to perform ahead of the market. We are becoming more efficient, like we discussed before, and we have been less FTEs serving more employees working, again, this quarter. Digital, also building on q one, grew 2% this quarter as we see client wins and demand increasing, like Sandra just highlighted. The professional solutions and permanent hiring do remain subdued as hiring confidence somehow still remains low, declining by 1624%, respectively. In Canada, we also saw good underlying improvement.
And as I can see in the chart, a return to growth already this quarter. The EBITA margin for North America, therefore, came in at 4.1%, up 70 basis points year over year, showcasing productivity gains. Now moving on to Northern Europe on Slide nine. In Northern Europe, we do continue to see mixed trends. Temp proves to be more resilient as agility is sigma appliance with sentiment on the perm side more still uncertain.
From a sector perspective, we see sequential improvement in industrial pockets supporting our operational business, but at the same time, automotive continues to be subdued. In The Netherlands and zooming in now in The Netherlands, growth sequentially improved from minus 5% to minus 5% from the previous minus 7% in Q1. Adaptability was good despite, let’s say, the adverse and we’ve discussed it before. It’s a quarter impacted heavily by holidays, working days and long weekends, but adaptability, by and large, was good. Operational was minus 3% for the quarter, improving again versus Q1 as we see the impact already of several client wins over the last few months.
Professional though is facing a challenging environment as the broader market is slowing down. We see this also reflecting obviously in the subdued permanent hiring. On the other hand, remember, our health care acquisition software helped to a certain extent or to a large extent to offset a large part of the headwinds we faced in the broader professional talent solutions specialization. Moving on to the East, Germany. So Germany saw a modest sequential improvement as decline rates eased to minus 7%, but still mostly on easy comparables.
As here, the labor market environment remains unchanged. Digital at minus 5%, while operational still down 8%, where automotive obviously remains challenging. This quarter, again, remember, working days and holidays significantly impacted profitability due to the nature of the contracts. In Belgium, we see a slightly kind still, but still very good adaptability. Operationally, it’s growing 1%, reflecting underlying industrial improvement in Belgium.
But like other Northern European countries, professional remains challenging. Remember, here we’re number one and quite exposed to all the different specializations. As we mentioned during our capital markets event, we saw this quarter the first self-service shifts through the digital marketplace, and we are quite excited and pleased to see the initial adoption of our digital marketplace. Moving on to the broader Northern European subregions, we are back to growth. Poland, 17% already on top of strong growth last year and Switzerland, 9% leading the pack, while Nordics and Dimension remain subdued.
Growth is also profitable as we expanded margin by 40 basis points year over year. And moving on now to the segments, Southern Europe, UK and LatAm on Slide 10. Let me start with France. So in France, we can almost say that we see similar trends as we saw and just discussed in Northern Europe, somehow an easing of decline rates, a better Q2 than Q1 after a slow start of the year. This improvement was mostly notable in the operational business, now down 3% versus 6% in q one.
Our on-site business is growth and is doing particularly well here. Professional, though, slowed to minus 80% and also perm, again, 20% down still year over year. Digital, while still slightly negative as sequentially improved, mainly on the bank of our strong aerospace and aerospace industry. The EBITA margin was 4.1%, and France did a good job and showed control solid control and adaptability. Now Italy, again, now on top of growth, Q2 last year was a very strong growth for a quarter for Italy, continues to see good growth and is still doing well for many quarters in a row.
Operation was up 2%, and our investments in growth segments such as IT and Healthcare are paying off as Professionals also grew 3%. Profitability remained strong, and we continue to invest in our business and excited for the times to come. Iberia also grew 4%, here primarily driven by Spain as we continue to see good momentum growing at 6%. This is mainly driven by strong performance in its operational and enterprise talent solutions. Again, here, we remain investing in growth segments with many opportunities to grow further.
Furthermore, in broader in the region, revenue and profit performance were mixed across other Southern European countries, UK and LatAm. The U. K. Labor market continues to soften, and we were down 15%. On the other hand, in Latin America, again, on top of solid growth last year, we continued to grow 7% with all our countries showing growth.
Moving on to Asia Pacific. The Asia Pacific region continues to do well and is now as a region back to growth with good profitability. Japan demonstrated solid growth, 6% combined with strong profitability, a good example of the impact of leaning in on specialization. Remember, Japan, as we discussed before, is one of the countries that operates talent centers at scale already, well embedded in our ways of working out on service models, supporting solid growth in our operational business. Digital continues also to do well.
We continue to invest, and we are ideally positioned to support clients and talent in a very Canada scarce market. Moving South, Australia and New Zealand also improved, another market that is accelerating the rollout of our digital marketplace with over, in this quarter, 200,000 shifts in the quarter alone running through the marketplace already. India grew double digit, and we continue to invest in the right growth segments here. Overall, the EBITA margin for the region was 4.3% in this second quarter, showing strong operational discipline, while remember continuing to invest in growth. And that concludes the performance of our key geographies.
So let me now walk you through our financial performance on Slide 13. First, let me start from a specialization point of view. Sander alluded to it in the beginning. And conclude that with the exception of Professional, all specializations made a significant step up, with operational typically early cyclical and enterprise closed already to last year levels or this quarter. Once again, this quarter, our gross profit, and you can see and OpEx were aligned, we’ll talk more about it later.
And that way, the quarter EBITA margin was 3%, similar profitability margins last year despite lower revenue and adverse FX impact. Underlying EBITDA was EUR $471,000,000. And let me unpack a little bit items until net income. Starting with integration costs and one offs. In this quarter, days amounted to EUR 35,000,000, mainly related to reorganizations in Germany, The Netherlands and France.
In the line amortization and impairment of intangible assets, nothing really relevant. It’s just a regular accounting treatment of the purchase price allocation of our acquisition of Sorvec. Net finance costs though include this quarter the write off of all the remaining value of the seller notes of our loans towards CareerBuilder and Monster joint venture to the extent of EUR 32,000,000. The effective tax rate for the first six months was 30%, impacted in general by the low taxable income following a change in profit mix and lower earnings. Our 25% guidance is a notch higher therefore to somewhere between 2931%, mainly reflecting this current country mix.
Adjusted net income was EUR 84,000,000. With that, let’s continue and look now in more detail at our gross margin bridge on Slide 14. Gross margin came in line with our expectations, albeit at the lower end driven by FX, in particular, and subdued perm. Now first of all, remember, like for like, we need to remove 60 basis points of the impact from the divestment of Monster in HR solutions. So year on year and starting with the left, our temp margin is down 40 basis points.
And here, geographic and client mix continue to have a very large impact. This is where the market is today. Penetration rates are stable in many markets, seasonality is returning and large clients are up high single digits, and we expect this trend to continue. In addition, idle time linked to light quarter and holidays impacted especially, as I mentioned before, Northern Europe. Sundar mentioned, I also mentioned it before, uncertainty continues to weigh on perm and agility solutions are doing better, but the permanent side is not.
So to the extent that today, even compared to q one, we lost sequentially 5,000,000 in fees alone. This weighs on a margin, and it had an impact of approximately 10 basis points versus original expectations. Contrary though to the subdued transactional perm, RPO, so companies again outsourcing their recruitment processes, continues to do well, and we’re actually growing 8%. We’re finding new ways to revenue in RPO, either it’s being in mid market, in new clients and new activities. Therefore, HRS, the overall HRS, excluding Monster, has a positive 30 basis points impact, which now brings me to the OpEx bridge on Slide 15.
And remember, this one is sequential is how we compare versus Q1. Our underlying operating expenses came in at €923,000,000 broadly stable sequentially as FX offset seasonality and timing in the year of strategic investments. Total cost decreased 4% year over year or EUR 35,000,000 less and directly aligning with the 4% organic gross profit decline. As discussed at the CME, we’re making strides in building a stronger, more resilient and profitable handstand. This quarter, we’ve seen both a 1% increase in field productivity compared to last year as we continue to implement new service models and our indirect costs have continued to decrease structurally year over year, while still protecting our strategic investments.
Similar to Q1, we have successfully maintained our EBITDA margin year over year, resulting in an organic recovery ratio of over 60%. We also incurred one offs, primarily in Northern Europe and France, we discussed it before. We continue to roll out structural optimization cost savings. This will either ensure we have a minimum level of profitability in every market we operate or we’ll continue to free up resources simply from better ways of working and rolling out our strategy. Now leading it back to our CME and t one publication, with these additional efforts in one offs and restructures in the first half of the year, we are now on track to deliver north of the 100,000,000 net structural savings for 2025.
And with that in mind, let’s move on to Slide 16, which contains our cash flow and balance sheet remarks. Our free cash flow for the quarter was positive €82,000,000 reflecting good working capital management. DSO was fifty five point seven days, still up sequentially. And here, again, the very same client mix that we discussed before on margin puts also upward pressure with most of the impact accounted by a few large clients. Our leverage ratio is 1.8.
And remember, it typically peaks in Q2 according to seasonality of earnings, cash flow, and dividend payments. And that brings me to the outlook on slide 17. And let me start with the current momentum. So volumes in early July, so on these first two weeks, are in line with June. If we then look at our gross margin, in q one and q two, we saw our gross margin down approximately 90 basis points year over year.
And remember, this includes 60 basis points from Monster deconsolidation. Therefore, looking ahead to Q3, we expect broadly a similar decline with minor puts and takes as Monster was also deconsolidated as of mid September last year, and FX will continue to play a role. If we look at operating expenses, we expect them to be modestly lower on the back of the continued cost savings and the typical seasonal dip in OpEx we have from Q2 to Q3 from the treatment of holidays. Balancing this, we expect a step up in profitability in the second half of the year, broadly in line with the regular intra year pattern. So to summarize, let me wrap it up.
Q two, we see a step up, not an inflection, and you keep doing what we do. We will continue to, one, focus on profitable growth by having better propositions and focusing on structural growth segments. Two, continue to be, like, laser focused in delivering better, more scalable talent service models, and with that, free up productivity and scalability on the field. And three, we’ll strive to keep improving and reduce our indirect costs. In short, we continue to progress in our growth algorithm by rolling out our agenda to deliver experience at scale in line with our partner for talent strategy.
And that concludes our prepared remarks, and we look forward to taking our questions. Elbe, please.
Elba, Conference Moderator, Randstad: Ladies and gentlemen, we are now ready to take your questions. Please introduce yourself before asking your question. Again, I want to remind you, if you wish to ask a question, please press pound key five on your telephone keypad. We kindly remind you that you are limited to one question and one follow-up. First, analyst can go ahead.
Your line is now open.
Andy Grobler, Analyst, BNP Paribas: Hi. Good morning. This is Andy Grobler from BNP Paribas. Just to start on The US, if I I may. So good progress in the business.
Can you just talk through how the trends in terms of large clients and SME have have gone through the quarter and what you’re hearing back from those clients in terms of their confidence at this point?
Sander Vonnet Nordende, CEO, Randstad: Yes. Let’s say, Andy, thank you very much for that question. I think, as I said, there’s still uncertainty in the market, but that’s as we also say, it’s the new normal. So clients are still experiencing that. I don’t think they’re they’re ready for big decisions, whether it’s investments in infrastructure, technology, or people, they take it one step one step at a time.
Having said that, we’ve made some very good progress, in our digital business with some of the big banks and the retailers where we have had nice upticks in activity. We have had some good new wins in our RPO business, which is primarily focused on North America, of course, with some of the tech companies, with some of the banks as well. So all in all, I would say the mood music is ticking up slightly, but I wouldn’t go a whole a whole lot further than that, Andy.
Andy Grobler, Analyst, BNP Paribas: Thanks. And just a follow-up on, again, on North America. If you look at the number of placements per per member of corporate staff, it it grew very sharply during the quarter, up 18%. The rest of the world was a bit more modest. Is that the level of growth of kind of the shape of things to come as you continue to roll out your digital platform?
George, CFO, Randstad: Andy, you you’re breaking up. Do you what grew through the quarter? Sorry. Just to make sure we address your question.
Sander Vonnet Nordende, CEO, Randstad: Placements per FCU.
Andy Grobler, Analyst, BNP Paribas: Sorry. The the number of placements per member of corporate staff.
Sander Vonnet Nordende, CEO, Randstad: Absolutely. Yeah. I I
George, CFO, Randstad: alluded to that. So as we continue to roll out well, in the case of The United States, already the digital marketplace, that’s the only way we operate in operation. But combined with talent centers and delivery centers, we continue to see the benefits of that not only from a better proposition, but also given to self-service, given everything we can do to accelerate and have immediate propositions, an increase in productivity from the field. So on the back already of a few quarters, this quarter more pronounced, we see indeed the ability to generate more placements with less FTE. And that will basically continue to feed how we monitor the productivity and the gains we have in our field.
Andy Grobler, Analyst, BNP Paribas: Great. Thank you very much.
Sander Vonnet Nordende, CEO, Randstad: Thank you, Amy.
Elba, Conference Moderator, Randstad: We are ready for our next question. Please go ahead.
Simon Rishi, Analyst, Jefferies: Yes. Good morning. Simon Rishi speaking from Jefferies. Could you comment on the June exit rate of the group level, and if you could flag any could flag any countries benefiting from a particularly good exit rate? Thank you.
George, CFO, Randstad: Yeah. So normally so, Simon, we we we don’t necessarily disclose the exit rates per country, but let me just help you a little bit. So one, it’s if you look at most of the numbers we publish as well on in detail, the the step up from q one to q two is broad based. So practically, in every country, we have return of seasonality and a step up, let’s say, of employees at work. So the growth rates are broad based and improvements on average around 2%.
If we look at, let’s say, at exit rates of the quarter, obviously, we left Q1 with approximately minus 4%. We said, on average, April was in line with margin Q1. So things have improved throughout the quarter. It’s a very difficult quarter to have an exact number because you have a lot of public holidays and long weekends, so it’s very difficult to say. But we are quite comfortable when we say July started in the same fashion as we exit June and the quarter.
Simon Rishi, Analyst, Jefferies: Okay. And a quick follow-up to this. Assuming this improving trend continue, do you expect at some point in q three to return to flat organic growth on a year on year basis?
George, CFO, Randstad: Let’s say, it country by country, but that’s one or two things. Indeed, we see a step up. I also started by saying seasonality was more pronounced this year even than it was last year. The only other of of, let’s say, point that we have to offset is, of course, we are now starting to face more difficult comparables, give or take between Q2 last year to Q3 last year. We were 1% to 1.5%, let’s say, improvement.
So yes, on one hand, you have an improving trend, and we’ve been seeing that throughout the last six months that we’ll face on the other hand
Sander Vonnet Nordende, CEO, Randstad: a
George, CFO, Randstad: slightly headwinds from comparables. Is the net impact, I’ll leave it to you, but indeed, that’s the two things combined.
Sander Vonnet Nordende, CEO, Randstad: You.
Speaker 5: Are ready for our next question. Please go ahead.
Elba, Conference Moderator, Randstad: Good morning.
Unidentified Analyst, Analyst: Good Thank you very much for taking my question. Just wanted to get some more color on The U. S. Please. The temp staffing data obviously tells you one thing, but your top line trends say something else.
So can you maybe help us unpack what was maybe self help, maybe the digital aspect that has helped you versus what the underlying market conditions are? Thank you.
Unidentified Analyst, Analyst, Kepler Cheuvreux: Yeah.
George, CFO, Randstad: So we I mentioned as well, Son, if you don’t want to say more about specific client trends or something. But let’s say, if we look at the largest segments, Swastin, I think it’s probably easy to start there. What we see is primarily with, let’s say, penetration rates stabilizing overall. We see clearly an uptick on large clients. So a lot of the agility needs and the entry, let’s say, the seasonality agility demands from our clients, and that is particularly expressed in our large client segment.
So we’re doing particularly well there. It is clear also supported by the rolling out of our digital marketplace. So in many clients, large clients in The United States, we share from a procurement perspective as at least two suppliers If we have a better proposition, if we are able to have immediate talent availability, we can do well in terms of fulfillment rate. We can do well to basically be the first one to have talent available for our clients. Overall, that segment in particular is enabling us to support growth above markets.
Thank you.
Sander Vonnet Nordende, CEO, Randstad: And I would you can add our digital North America digital business. US digital has shown some nice growth in the quarter as well, Suresini. So it’s a story of operational and digital, I would say.
Unidentified Analyst, Analyst: Thank you. That’s very clear. And just a quick one on the outlook on gross margins and SG and A. When you say slightly lower gross margins and modestly lower SG and A, can you just help us quantify that impact? Yes.
George, CFO, Randstad: So both let’s say, on both, if typically look at normal years, so let’s forget COVID and, let’s say, all that ups and downs. But if you look at normal years, we typically have a seasonal dip in terms of margin. Let me start with the margins, Wassini. From q two to q three, there’s a few reasons. You remember, we have more student business.
We have certain more hospitality business. There’s also bench in some countries. So typically, our margin goes down from q two to q three. Normally around 20 to 30 basis points. At the same time, we have we had, let’s say, this quarter, and we expect still to face it in Q3 given how things are entering in a, let’s say, unfavorable FX impact on the gross margin.
So bright in line, let’s say, the current trends year over year, we expect to continue. Also because these larger clients, I mentioned before, they have, let’s say, a a low market. They have a larger they are growing high single digits. That has an impact in our in our in our margin. It’s the market as it is today, larger clients, seasonality returning, and we’re able to grow in in them.
Now the opposite, almost a mirroring effect of this is in OpEx. So normally as well, our OpEx from q two to q three takes a step down, typically because of holidays and the treatment of that. Also, we’ve been continuing to do cost savings. So this will continue to materialize throughout the year. And remember, when we talk about large clients increasing in the mix, right, so we find growth in large clients more than we find growth in SME.
That also comes at a different, let’s say, cost effective talent service models. So we are also able in the mix of our operating expenses to be able to do it more efficiently. And last but not the least, again, the mirroring effect, FX will be supportive. So let’s say, less OpEx in q three to be expected just because of OpEx of FX. Now you put all of this together, I think probably the best way to look at this is and set the tone for q one and q two.
Normally, we see an uptick in last year, if I’m not it was 10,000,000 to $15,000,000 in profitability. So we have, on one hand, gross margin going down. We have, on the other hand, OpEx also going down. So the net impact of that from a profitability perspective is 10,000,000 to $15,000,000 We’ve been striving to not lose ground in profitability versus last year. So we’ll do everything we can to, again, in the second half of the year, have an uptick in profitability and profit in line with what we did last year.
Unidentified Analyst, Analyst: Understand. Thank you very much.
Elba, Conference Moderator, Randstad: We are ready for our next question. Please go ahead.
Remy Grenou, Analyst, Exane: Morning. This is Remy Grenou
Elba, Conference Moderator, Randstad: from Remy, Exane your line is now unmuted. Please go ahead.
George, CFO, Randstad: Hello, Remy. Go ahead. Good Hello.
Remy Grenou, Analyst, Exane: Yes. Good morning. So yes, just a question on the professional weakness that you’re calling, which seems to be the only specialization, which has deteriorated a bit sequentially. Can you give us a little bit more flavor there? You’re flagging the uncertainty, but keen to understand if this is something that you’ve seen in previous cycles as well.
Is it something that would consider normal given given the context and and your your experience and historical precedent? And if there is any other potential impact, and I’m thinking they are more structural versus the the the cyclicality that we are guessing that we’ve discussed so far in
Simon Rishi, Analyst, Jefferies: the call.
Sander Vonnet Nordende, CEO, Randstad: So let me let good good question. I I think it’s fairly straightforward. In times of uncertainty, if you need people to run your business or to deliver packages or whatever because you have business, you take them. If you’re looking to hire that marketing experts, that HR person, and things are not so certain, you say, well, maybe I’ll give it a quarter or two until we hire that person, until we have a bit more certainty under our belt for where this market is going. I think that is the challenge in in professional with a notable exception, by the way, for digital.
Because our digital business, specifically in North America, has seen a nice uptick, especially in retail and and financial services. So I think it’s it’s it’s as simple as as that.
Remy Grenou, Analyst, Exane: Understood. And one additional question, if I may. Just making sure I got that right on the gross margin guide for Q3. So you’re saying that you expect a similar decline year on year, so about the minus 90 bps versus q three in last year, which I’m just making sure I’m using the right base. So that was 19.5%.
Right?
George, CFO, Randstad: Yeah. Yeah. So indeed, we’ve been having 90 now. Remember, this includes the 60 from the deconsolidation of Monster. Now we deconsolidated around half fourteen, fifteen September last year.
So there is a slight, let’s say, improvement in that respect. Now you also have to take puts and takes. We need to see how the mix evolves in terms of FX or in terms of perm, the impact of FX. But in general, the same delta year over year with a slight benefit from having the consolidated also already at the end of the September. Underlying
Remy Grenou, Analyst, Exane: Okay. Understood. Thanks.
Elba, Conference Moderator, Randstad: We are now ready for our next question. Please go ahead.
Sander Vonnet Nordende, CEO, Randstad: Good morning. Is
Unidentified Analyst, Analyst, Kepler Cheuvreux: from Kepler Cheuvreux. I have a question on operating working capital. It showed quite an improvement compared to last year. Can you please give me a bit of color on what drove the reduction this quarter compared to last year and what we can expect for the rest of the year?
George, CFO, Randstad: Yes. So there is I mean, first of all, when we look at operating working capital, and I mentioned it, let’s say, it a price is good, when it’s, let’s say, less, let’s say, good in terms of what expectations have been, I I I’m not a fan, so we don’t look at it on a quarter specifically. So, ideally, zooming out helps. A few a few things. So, I mean, we we mentioned it.
Our DSO remains impacted, let’s say, by a larger development on on the larger clients. At the same time, we’re doing a lot of work on our own improvements in terms of time to invoice and over dues. Our over dues are at the lowest historically ever. So there’s a lot of good work in our teams in that respect. This quarter in particular, and I’ll suggest we look at the first six months, you have an impact from liability.
So that’s just basically a reflection on timing and proactive working capital management. So just making sure that we manage as well as we can our working capital. But I suggest we look at the first half and not just the quarter in particular.
Unidentified Analyst, Analyst, Kepler Cheuvreux: Okay. Okay. Thank you. As
Elba, Conference Moderator, Randstad: a reminder, you can ask a question by pressing key pound five on your telephone keypad. Please introduce yourself when asking a question. Thank you very much. We will now take our next question. Your line is now open.
Please go ahead.
Sander Vonnet Nordende, CEO, Randstad: Thank you very much, Elba. If there are no further question at this time, I think we’re gonna wrap up the call by saying a big, big thank you once again to our more than 600,000 talents and, of course, the Randstad team members for all their hard work, for executing our strategy and running the business with rigor and discipline. We appreciate it a lot, and see you all next quarter.
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