Slide 1: 3rd quarter results 2014: stable revenue growth
3rd quarter results 2014 stable revenue growth Jacques van den Broek, CEO Robert Jan van de Kraats, CFO Randstad Holding nv October 30, 2014
Slide 2: Disclaimer & definitions
disclaimer & definitions Certain statements in this document concern prognoses about the future financial condition, risks, investment plans and the results of operations of Randstad Holding and its operating companies as well as certain plans and objectives. Obviously, such prognoses involve risks
Slide 3: Agenda
agenda performance financial results & outlook Q&A appendices 3 October 30, 2014 third quarter results 2014
Slide 4: Performance
performance 4 October 30, 2014 third quarter results 2014
Slide 5: Stable growth
stable growth € million Q3 ’14 Q3 ’13 % Org. L4Q ’14 L4Q ’13 % Org. revenue 4,516 4,363 +4% 17,032 16,525 +4% gross profit 835 796 +6% 3,125 2,999 +5% gross margin 18.5% 18.2% 18.3% 18.1% operating expenses* 625 612 +3% 2460 2,421 +2% opex margin 13.8% 14.0% 14.4% 14.6% EBITA* 210 184 +15% 664 578 +
Slide 6: Q3 2014: continued growth
Q3 2014: continued growth YoY Randstad growth development 15% 5% -5% -15% Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Group Europe North America Rest of World North America and NL accelerating growth in Q3, stable growth in most European countries France and Germa
Slide 7: Our priorities
our priorities Client total talent architecture Staffing Professionals Inhouse HRS leverage our expertise implementing global expand in white-collar grow in MSP and RPO in specialty staffing concept per segment and professionals support TTA approach: focus on permanent focus on permanent increase sh
Slide 8: Setting the ambition
setting the ambition profitable organic growth through activity-based field steering grow to 5-6% EBITA - profitable growth - improve margin - increase productivity activity-based field steering - market validation - funnel management (temp & perm) growth - weekly activity mgt management accelerator
Slide 9: North America: record profitability & strong growth
North America: record profitability & strong growth incremental conversion ratio of 60% performance North America - quarterly revenue + 5% (Q2: +2%) 1,000 6% 5% US staffing & inhouse, gross profit +8% 900 4% - stable revenue trend +10% in Q3 3% 800 - good performance in manufacturing and logistics 2
Slide 10: France: improving profitability in difficult market
France: improving profitability in difficult market recovery ratio of 139% performance France - quarterly revenue -/-4% (Q2: -/-1%) 800 6% - combined staffing & inhouse at -/-5% YoY 5% 700 - growth in inhouse of 12% 4% - focus retained on client profitability 3% 600 2% - professionals at +1% vs. Q2:
Slide 11: The Netherlands: closing the gap to market
the Netherlands: closing the gap to market performance the Netherlands - quarterly revenue at +4% (Q2: 0%) 800 8% - Randstad +3% YoY (Q2: -/-1%), growth in SME 7% 700 6% - Tempo-Team growing above market, +7% 600 5% - overall professionals up 16% 4% 500 - focus on client profitability 3% 400 2% - pe
Slide 12: Germany: continued market challenges
Germany: continued market challenges performance Germany - quarterly revenue +2% (Q2: +5%) 600 7% - price effect easing (+6%) 6% 500 - perm growth of +29% (Q2: +37%) 5% 400 - good growth in IT, inhouse & Tempo-Team 4% 300 3% - focus on SME & delivery models 200 2% - impact of regulatory changes Q3 2
Slide 13: Belgium: continued growth, strong cost control
Belgium: continued growth, strong cost control incremental conversion ratio of 140% performance Belgium - quarterly revenue +6% (Q2: +5%) 400 6% - growth easing throughout the quarter 5% 300 - inhouse improving growth at +13% (Q2: +11%) 4% - good growth in white-collar 200 3% - professionals up by +
Slide 14: UK: focus on profitability
UK: focus on profitability performance UK - quarterly revenue -/- 3% (Q2: +3%) 250 2.5% - gross profit up 8% 2.0% 200 - improved mix: professionals 1.5% 150 - construction still performing well 1.0% 100 0.5% - finance & IT remain under pressure 50 0.0% - focus on client profitability in staffing & i
Slide 15: Iberia: stable growth
Iberia: stable growth incremental conversion ratio of 203% performance Iberia - quarterly Spain 300 5% - revenue growth +9% (Q2: +11%) 250 4% - growth in automotive and manufacturing 200 3% - professionals & perm continue strong growth 150 2% 100 - strong operating leverage 50 1% - loss of revenue d
Slide 16: Other European countries: profitability improving
Other European countries: profitability improving performance ROE - quarterly Italy 400 5% - revenue growth at 12% (Q2: +15%) 300 4% - growth above market 200 3% - focus on specialties and perm 100 2% Switzerland 0 1% Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 - growth improved to +14% (Q2: +12%) reven
Slide 17: Rest of the world: stable growth
Rest of the world: stable growth performance ROW - quarterly Japan, growth at +6% YoY 400 2.0% - good growth in logistics and retail 350 1.5% - administrative growth continues 300 1.0% - investing in growth 250 0.5% Australia / New Zealand grew by 15% 200 0.0% Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Slide 18: Financial results & outlook
financial results & outlook 18 October 30, 2014 third quarter results 2014
Slide 19: Income statement Q3 2014
income statement Q3 2014 € million Q3 ’14 Q3 ’13 % Org. L4Q ’14 L4Q ’13 % Org. revenue 4,516 4,363 4% 17,032 16,525 +4% gross profit 835 796 6% 3,125 2,999 +5% gross margin 18.5% 18.2% 18.3% 18.1% operating expenses* 625 612 3% 2,460 2,421 +2% opex margin 13.8% 14.0% 14.4% 14.6% EBITA* 210 184 15% 6
Slide 20: Q3 2014: financial key points
Q3 2014: financial key points free cash flow of € 250M vs. + € 310M LY - growth has led to increase in working capital requirements leverage ratio improved to 0.9 (Q3 2013: 1.2) - net debt down to € 661M - interest expense down to € 4.0M (Q3 2013: € 4.7M) effective tax rate* amounted to 30% (FY 2013
Slide 21: Segment performance, focus on delivery models
segment performance, focus on delivery models Staffing in € M Q3 2014 Q3 2013 % organic* good growth in North America, Benelux and emerging markets with revenue 2,680.5 2,648.4 2% continued focus on revenue quality EBITA 126.8 109.7 16% Germany and France face challenging markets and retain a EBITA
Slide 22: Gross margin bridge
gross margin bridge YoY gross margin development + 0.2% 0.0% + 0.1% 18.5% 18.2% margin expansion in United Kingdom, Belgium & perm fees were 9.8% of GP (up from 8.9% LY) France - organic growth of 15% YoY - negative impact FX continued focus on client profitability 22 October 30, 2014 third quarter
Slide 23: Operating expenses bridge
operating expenses bridge sequential OPEX development in € M +4 +2 +0 +0 +7 -/-1 592 601 625 613 negative FX impact FTE growth in NL, Belgium, Iberia & Poland good cost control maintained higher commissions in North America 628 continued investment in emerging markets 23 October 30, 2014 third quart
Slide 24: Net debt down by €129M YoY
net debt down by € 129M YoY leverage ratio at 0.9 € million September 30, 2014 September 30, 2013 goodwill and intangible assets 2,617 2,728 operating working capital 598 566 net tax assets 513 348 other assets and liabilities 140 38 invested capital 3,868 3,679 equity 3,207 2,889 net debt 661 790 i
Slide 25: Free cash flow at €250M
free cash flow at € 250M € million Q3 ‘14 Q3 ‘13 L4Q ’14 L4Q ‘13 EBITDA 220 197 680 588 change in OWC 103 188 7 233 income taxes paid -/- 37 -/- 37 -/- 255 -/- 105 provisions -/- 4 -/- 18 -/- 38 -/- 4 net additions in PPE and software -/- 13 -/- 11 -/- 63 -/- 39 other items -/- 20 -/- 9 -/- 61 -/- 2
Slide 26: Outlook Q4
outlook Q4 organic revenue/wd grew by 4.2% in Q3 2014, while it was 3.4% in September - revenue growth stable in Q3 - October volume appears stable and in line with Q3 - smaller FX impact - comparison base continues to strengthen (-/- 1.1% in Q3 to +2.2% in Q4) gross profit stable throughout Q3 at 6
Slide 27: September exit rates
September exit rates revenue growth per working day Q3, 2014 September, 2014 North America 5% 5% France -/- 4% -/- 2% Netherlands 4% 4% Germany 2% 1% Belgium (inc. Luxembourg) 6% 3% Iberia 9% 6% United Kingdom -/- 3% -/- 6% Rest of Europe 16% 12% Rest of World 11% 10% Group 4.2% 3.4% 27 October 30,
Slide 28: ™- randstad
™- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services SA
Slide 29: Appendices
™- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services appendices
Slide 30: Financing: fixed vs. floating interest rates
financing: fixed vs. floating interest rates 10 year historic interest rates comparison 1M vs. 5Y 6% 5% 4% 3% average fixed rate = 2.7% 2% average floating rate = 1.7% 1% 0% October 2004 September 2014 we use floating interest rates as a natural hedge - spread above Euribor of 40-115 bps 30 October
Slide 31: Revenue split Q3 2014
revenue split Q3 2014 geographical area revenue categories 8% North America 20% 8% 21% France NL 6% Germany Belgium 5% 16% 21% 59% UK 8% Iberia RoE 12% RoW 16% staffing inhouse professionals 31 October 30, 2014 third quarter results 2014
Slide 32: EBITA breakdown by geography
EBITA breakdown by geography Q3 2014 Q3 2013 2% 2% 7% 1% 6% North America 4% 1% 6% 25% France 26% 6% NL 8% 12% Germany Belgium 15% UK 12% Iberia 21% 19% 17% RoE RoW 20% 23% 32 October 30, 2014 third quarter results 2014
Slide 33: Outlets by region
outlets* by region end of period Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 North America 1,074 1,087 1,075 1,055 1,067 France 743 766 794 791 849 the Netherlands 666 675 675 672 662 Germany 548 551 550 557 553 Belgium/Lux 314 313 314 307 319 United Kingdom 141 141 142 147 155 Iberia 288 290 283 405 41
Slide 34: Corporate staff by region
corporate staff by region average Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 North America 6,160 6,250 6,230 6,320 6,260 France 3,410 3,370 3,370 3,480 3,630 the Netherlands 4,420 4,320 4,240 4,260 4,300 Germany 2,610 2,600 2,610 2,620 2,520 Belgium/Lux 1,790 1,720 1,700 1,800 1,840 United Kingdom 1,53
Slide 35: Staffing employees by region
staffing employees by region average Q3 2014 Q3 2013 North America 105,900 99,600 France 74,400 79,000 the Netherlands 74,900 78,600 Germany 47,700 49,900 Belgium/Lux 43,300 43,700 United Kingdom 15,900 18,700 Iberia 61,000 55,100 Rest of Europe 57,900 49,600 Rest of world 107,800 111,400 total 588,