Randstad Nv · EURONEXT:RAND
Randstad Nv — Q3 2010 Earnings Presentation
35 slides from Randstad Nv's earnings presentation, Oct 28, 2010
Slide 1: 3rd quarter results 2010
3rd quarter results 2010 continued strong growth; revenue up 19% in Q3 2010 Robert-Jan van de Kraats, CFO Randstad Holding nv October 28, 2010
Slide 2: disclaimer & definitions
disclaimer & definitions Certain statements in this document comprise forecasts on Randstad Holding’s future financial condition and results from operations and certain plans and goals. By their nature, such forecasts generate risk and uncertainty because they concern events in the future and depend
Slide 3: agenda
agenda • performance • financial results & outlook • Q&A 3 October 28, 2010 third quarter results 2010
Slide 4: performance
performance 4 October 28, 2010 third quarter results 2010
Slide 5: growth stabilization in our markets
growth stabilization in our markets quarterly market growth YoY • market growth stabilized on average • continued high growth in markets that moved early 2008 2009 2010 • slow but steady improvement in lagging markets such as NL and UK monthly Randstad growth* YoY • administrative and professionals
Slide 6: Q3 2010: continued strong growth
Q3 2010: continued strong growth • revenue amounted to € 3,781 (+16% YoY organically) - organic growth per working day stable through the quarter on stronger comparables - growth in inhouse (from 50% to 55%) and professionals (from 1% to 8%) improving - growth in staffing (13%) unchanged; clerical s
Slide 7: the Netherlands: late cyclical market recovering
the Netherlands: late cyclical market recovering • organic revenue 0% (vs -5% in Q2 2010) - market growth improved slightly in Q3 revenue and EBITA margin - late cyclical due to service oriented economy - growth, as in Q2, driven by industrial segment - Randstad and Tempo-Team below market, however
Slide 8: France: beating the market in September
France: beating the market in September • organic revenue +19% in Q3 2010 - performed at market for the quarter, however strong outperformance visible in September revenue and EBITA margin - growth broad based; manufacturing main driver - permanent placement up 18% (YoY) - professionals segment stre
Slide 9: Germany: persisting strong outperformance
Germany: persisting strong outperformance • organic revenue +40% in Q3 2010 revenue and EBITA margin - strong outperformance of the market - slightly easing growth trend throughout the quarter due to seasonal pattern • gross margin sequentially improved - price increase CLA accepted - idle time impr
Slide 10: UK: continued growth despite challenging conditions
UK: continued growth despite challenging conditions • organic revenue +9% in Q3 2010 (vs. +1% in Q2 2010) revenue and EBITA margin • inhouse continued to gain market share - strong pipeline new clients - increased share at existing clients • professionals performance reflection of diversified end ma
Slide 11: North America: firing on all cylinders
North America: firing on all cylinders • organic revenue +23% in Q3 2010 - extended outperformance of US & Canadian market revenue and EBITA margin - growth US staffing & inhouse strong at +30% (YoY) - US professionals growth 17% (YoY) driven by ICT and Finance - Canada up (18%) in Q3 - perm fees up
Slide 12: revenue development per industry segment
revenue development per industry segment Q3 2010 vs Q3 2009 USA Germany France Netherlands* Manufacturing ++ ++ ++ ++ Automotive ++ ++ ++ ++ Food ++ ++ ++ o Transport ++ ++ + + Business services ++ + ++ o Financial services ++ ++ ++ - Public administration o n/a n/a -- Health & social work ++ - o --
Slide 13: financial results & outlook
financial results & outlook 13 October 28, 2010 third quarter results 2010
Slide 14: Q3 2010: financial key points (1)
Q3 2010: financial key points (1) • stable growth trend throughout the quarter • underlying gross margin sequentially flat since Q4 2009 - gross profit amounted to € 698 million, up 17% YoY • underlying operating expenses sequentially 3% up to € 545 million - limited investments in FTE in fast growi
Slide 15: Q3 2010: financial key points (2)
Q3 2010: financial key points (2) • moving average DSO improved by 1 day to 56 days (YoY) • free cash flow in Q3 2010 € 173 million vs. € 359 million in Q3 2009 - € 232 million tax one-off included in cash flow Q3 2009 - underlying improvement based on lower DSO and higher operating result • net deb
Slide 16: income statement Q3 2010
income statement Q3 2010 € million Q3 2010 Q3 2009 % change % organic revenue 3,781 3,178 19% 16% gross profit 698 596 17% 14% gross m argin 18.5% 18.8% operating expenses* 545 503 8% 7% opex as % of revenue 14.4% 15.8% underlying EBITA 153 93 64% 46% underlying EBI TA m argin 4.0% 2.9% actual EBITA
Slide 17: gross margin development Q3 2010
gross margin development Q3 2010 19,5 19 -/- 0.4 18.5 18,5 +0.2 -/- 0.4 +0.3 +0.3 18 18.8 18.5 17,5 Q3 2009 temp margin perm fees HRS/other French tax Q3 2010 • commercial pressure on temp margins stabilized - geographical & segmental mix shifts and renewed contracts • perm fees increased by 24% org
Slide 18: productivity development
productivity development 120 employees working/corporate FTE 1998 index = 100 110 100 10% more upside vs 1998 90 80 regained 15% vs LY 70 60 50 1998 2002 2006 2008 2010 Group NL GE US staffing • large variation in productivity developments per country • solid improvement potential across the board 1
Slide 19: productivity development
productivity development gross profit per FTE 1998 index = 100 1998 2002 2006 2008 2010 • ongoing improvements in various countries • limited growth when corrected for inflation • group performance influenced by geographic mix shifts 19 October 28, 2010 third quarter results 2010
Slide 20: consolidated balance sheet
consolidated balance sheet € million September 30, 2010 September 30, 2009 property, plant & equipment 132 159 intangible assets 3,064 3,246 deferred tax assets 461 460 other assets 3,119 3,118 total equity 2,697 2,481 non-current liabilities 1,675 2,226 current liabilities 2,403 2,275 balance sheet
Slide 21: consolidated cash flow statement
consolidated cash flow statement € million Q3 2010 Q3 2009 cash flow from operations before OWC 128 214 release of OWC 62 157 additions of PPE and software -/- 18 -/- 14 financial receivables - - dividend - - disposals of PPE 1 2 free cash flow 173 359 € million Q3 2010 free cash flow 173 net (acqui
Slide 22: managing through the cycle
managing through the cycle growth phase decline phase stabilization phase growth phase • market share • market share • market share gains • market share gains gains gains • productivity levels • productivity mgt • productivity mgt • productivity mgt allow for growth, through unit through unit throug
Slide 23: outlook
outlook In Q3 we saw: • stable organic growth rate of 16% during the quarter • inhouse & staffing showing robust growth • professionals strenghtened • positive trends persisted in October • we expect healthy growth in all segments based on solid trends 23 October 28, 2010 third quarter results 2010
Slide 24: save the dates: Randstad analyst & investor days
save the dates: Randstad analyst & investor days analyst & investor days 2010 dates: 24 & 25 November venue: London City 24 October 28, 2010 third quarter results 2010
Slide 25: Q&A
Q&A ™r- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services
Slide 26: appendices
™r- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services appendices
Slide 27: debt facilities & repayment schedule
debt facilities & repayment schedule 135 831 259 105 135 • covenant; net debt/EBITDA* of max. 3.5 - in Q3 2010 the net debt/EBITDA ratio was 1.8 • syndicated facility amounts to € 1,995 million * EBITDA; 12 months rolling back, before integration costs and one-offs 27 October 28, 2010 third quarter
Slide 28: financing: fixed vs. floating interest rates
financing: fixed vs. floating interest rates 10 year historical interest rates comparison 1M vs. 5Y 6% 5% average fixed 4% rate = 4.0% 3% average floating rate = 3.0% 2% 1% 0% July 1999 September 2010 1M Float 5Y Fixed • we use floating interest rates as a natural hedge - spread above Euribor of 50-
Slide 29: tax guidance unchanged
tax guidance unchanged driver effective* cash tax explanation impact tax rate rate growth operating companies + + impact of permanent differences growth opcos and mix + + higher weight countries with high CIT rate effects changes in corporate income + or -/- + or -/- dependent on direction of change
Slide 30: geographic performance
geographic performance revenue EBITA margin € million Q3 2010 Q3 2009 oganic growth Q3 2010 Q3 2009 the Netherlands 736 740 0% 6.8% 7.1% France 840 714 19% 3.7% 0.9% Germany 480 342 40% 6.9% 5.4% Belgium/Lux 372 317 17% 4.2% 3.9% United Kingdom 207 182 9% 1.2% -0.1% Iberia 227 215 6% 2.4% 2.8% Other
Slide 31: segment performance
segment performance € million Q3 2010 Q3 2009 organic growth revenue: staffing 2,571 2,222 13% inhouse services 539 342 55% professionals 671 614 8% 31 October 28, 2010 third quarter results 2010
Slide 32: revenue split Q3 2010
revenue split Q3 2010 geographies segments 6% 19% 13% 18% 5% 6% 22% 14% 68% 6% 10% 13% NL France Germany Belgium/Lux. UK Iberia ROE N-America ROW staffing inhouse professionals 32 October 28, 2010 third quarter results 2010
Slide 33: outlets by country
outlets* by country end of period Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 the Netherlands 739 725 726 754 761 France 896 928 966 988 993 Germany 475 450 433 428 431 Belgium/Lux 387 388 392 329 332 United Kingdom 297 300 289 292 294 Iberia 266 264 261 265 266 Other Europe 351 346 340 340 341 North Am
Slide 34: corporate employees by country
corporate employees by country average Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 the Netherlands 5,300 5,210 5,260 5,610 5,870 France 3,940 3,870 3,870 4,000 4,270 Germany 2,740 2,430 2,370 2,320 2,290 Belgium/Lux. 2,150 2,030 2,020 2,050 2,010 United Kingdom 2,050 2,040 2,040 2,110 2,230 Iberia 1,470
Slide 35: staffing employees by country
staffing employees by country averages Q3 2010 Q3 2009 the Netherlands 87,800 89,400 France 93,300 81,500 Germany 56,400 38,100 Belgium/Lux. 51,000 45,000 United Kingdom 22,400 19,100 Iberia 52,700 52,200 Other Europe 35,700 28,900 North America 55,700 44,700 Rest of world 87,300 74,600 total 542,30