Slide 1: 3rd quarter 2013: back to growth in September
3rd quarter 2013 back to growth in September Robert Jan van de Kraats, CFO Randstad Holding nv October 31, 2013
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 31, 2013 third quarter results 2013
Slide 4: Performance
performance 4 October 31, 2013 third quarter results 2013
Slide 5: Back to growth in September
back to growth in September € million Q3 2013 Q3 2012 % organic Q2 2013 revenue 4,363 4,397 0% 4,096 gross profit 796 799 +2% 747 gross margin 18.2% 18.2% 18.2% operating expenses* 612 638 -/-2% 601 opex as % of revenue 14.0% 14.5% 14.7% EBITA* 184 161 +16% 146 EBITA margin* 4.2% 3.7% 3.6% organic g
Slide 6: Q3 2013: gradual recovery in Europe
Q3 2013: gradual recovery in Europe YoY Randstad growth development growth in Germany, Iberia, the UK, Italy, Switzerland, Poland, Norway, Sweden focus on profitability in North America continued growth in Japan and emerging markets from -/-2.6% in July to +0.6% in September 6 October 31, 2013 third
Slide 7: North America: record profitability
North America: record profitability gross profit up by 2% YoY - revenue -/-3% (Q2: -/-3%) - limited impact from government shutdown performance North America US staffing & inhouse, GP up 4% - revenue down 4% - good performance in admin and perm up 3% - less demand in banking & finance US professiona
Slide 8: France: gradual recovery
France: gradual recovery higher gross profit, supported by subsidies revenue down 6% (Q2: -/- 13%) - improving rate of decline through the quarter - growth at inhouse accelerated driven by new performance France client wins and continued transfers - professionals slightly better to -11% YoY gross pr
Slide 9: The Netherlands: good profitability
the Netherlands: good profitability recovery ratio of 178% revenue down 4% (Q2: -/-4%) - focus on client profitability and delivery models - RNL at -/-1% and Tempo-Team at -/-9%, performance the Netherlands - Yacht improved to -/-9% gross margin effects easing - higher social security charges - init
Slide 10: Germany: strengthening growth
Germany: strengthening growth revenue at +4% (Q2: 0%) - significant price effect (+8%), will fade into Q4 - good growth in IT performance Germany - new CLA as from November 2013 gross margin effects easing - GM improved in staffing & inhouse - implementation equal pay operating expenses up 1% YoY -
Slide 11: Belgium: focus on costs
Belgium: focus on costs revenue -/- 6% (Q2: -/-8%) - lower rate of decline - administrative segment holding up well performance Belgium - inhouse at -/-17%, mainly automotive - improving trend in professionals focus on profitability - client profitability - field steering - FTEs down by 11% YoY - re
Slide 12: UK: continued growth, strong cost control
UK: continued growth, strong cost control revenue +5% (Q2: + 2%) - revenue September at +8% YoY - continued growth in professionals (+13%) performance UK - led by Education, Construction and Finance - decline inhouse persisted, due to focus on client profitability - good growth in MSP and RPO - perm
Slide 13: Iberia: improving profitability
Iberia: improving profitability Spain - revenue at 0% (Q2: -/- 1%) - focus on client profitability at former USG business performance Iberia - improving trend in manufacturing - higher growth in Professionals (mainly perm) and HRS - new organizational structure announced and completion of integratio
Slide 14: Revenue development per industry
revenue development per industry Segments USA Germany France Netherlands Manufacturing - o - o Automotive ++ ++ o ++ Food + o + - Transport ++ + - + Business services o o o o Financial services -- -- ++ -- IT services - - + + Public sector - + + ++ Health & social work + -- -- -- 14 October 31, 2013
Slide 15: Financial results & outlook
financial results & outlook 15 October 31, 2013 third quarter results 2013
Slide 16: Update transaction USG businesses
update transaction USG businesses integration is on track: - Poland, Switzerland and Luxembourg completed, rebranding Austria - Spain and Italy expected to be completed in H1 2014 financial consolidation and purchase price allocation: - P&L consolidation as from Q3 2013 - badwill of € 29M incurred i
Slide 17: Income statement Q3 2013
income statement Q3 2013 € million Q3 2013 Q3 2012 % change % organic revenue 4,363 4,397 -/- 1% 0% gross profit 796 799 0% +2% gross margin 18.2% 18.2% operating expenses* 612 638 -/- 4% -/- 2% opex as % of revenue 14.0% 14.5% EBITA* 184 161 +14% +16% EBITA margin* 4.2% 3.7% integration costs & one
Slide 18: Q3 2013: financial key points
Q3 2013: financial key points free cash flow amounted to € 310M vs. € 207M LY - higher profitability - DSO improved by 1 day YoY - favorable timing of payables leverage ratio at 1.2, down from 1.8 in Q2 impairment Australia of € 36.6M (non-cash): - profitability has remained behind expectations effe
Slide 19: Segment performance, focus on delivery models
segment performance, focus on delivery models Staffing in € M Q3 2013 Q3 2012 % organic* focus on revenue quality in North revenue 2,648.4 2,732.8 America stable trends across Europe EBITA 109.7 100.3 profitable growth in HRS EBITA margin 4.1% 3.7% (Q3 revenue: € 260M) positive impact CICE subsidies
Slide 20: Gross margin bridge
gross margin bridge YoY gross margin development + 0.2% + 0.2% -/- 0.1% -/- 0.1% -/- 0.2% margin expansion North America small positive impact HRS in mix CICE benefits in France perm fees were 8.9% of GP (vs. 9.3% LY) - negative impact FX legislative changes NL & Germany continued focus on client pr
Slide 21: Operating expenses bridge
operating expenses bridge sequential OPEX development in € M FTEs up by 1,050 sequentially - USG added 790 FTEs +13 +0 +6 +0 +0 +0 additional marketing costs and bonus accruals -1 -7 significant FX impact 592 601 recovery ratio: 132% YoY OPEX development in € M in Europe costs down € 16M +13 investi
Slide 22: Net debt down by €647M
net debt down by € 647M leverage ratio at 1.2 €M September 30, 2013 September 30, 2012 trade and other receivables 3,031 3,119 less: trade and other payables -/- 2,465 -/- 2,310 operating working capital* 566 809 cash & cash equivalents 125 199 less: current borrowings -/- 148 -/- 89 less: long-term
Slide 23: Free cash flow up by 50%
free cash flow up by 50% reflecting higher profitability, strong working capital management and timing of payables €M Q3 2013 Q3 2012 EBITDA 197 165 release of OWC 188 85 income taxes paid -/- 37 -/- 44 provisions -/- 18 6 net additions in PPE and software -/- 11 -/- 15 other items -/- 9 6 financial
Slide 24: Outlook
outlook revenue/wd in September at +0.6% - continued improvement into Q4 - comparison base 2% easier into Q4 2013 (Sept ‘12: -/-3%, Dec ‘12: -/- 5%) - same number of working days as last year - additional € 10M marketing investments in Q4 2013 vs. Q3 2013 - € 10M annual cost savings relating to rest
Slide 25: Q&A
™r- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services Q&A
Slide 26: Appendices
™r- randstad Staffing | Professionals | Search & Selection | HR Solutions | Inhouse Services appendices
Slide 27: Drivers effective tax rate
drivers effective tax rate effective tax rate* at 32% (vs. 32% in FY 2012) - change in geographical mix: high growth in countries with above-average tax rates - as our results improve, the relative effect of the tax planning measures decreases - full year 2013 guidance: 32% driver effective* cash ta
Slide 28: Financing: fixed vs. floating interest rates
financing: fixed vs. floating interest rates 10 year historic interest rates comparison 1M vs. 5Y average fixed rate = 2.9% average floating rate = 1.9% October 2003 September 2013 we use floating interest rates as a natural hedge - spread above Euribor of 50-115 bps 28 October 31, 2013 third quarte
Slide 29: Revenue split Q3 2013
revenue split Q3 2013 geographical area revenue categories 29 October 31, 2013 third quarter results 2013
Slide 30: EBITA breakdown by geography
EBITA breakdown by geography Q3 2013 Q3 2012 12% 21% 30 October 31, 2013 third quarter results 2013
Slide 31: Outlets by region
outlets* by region end of period Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 North America 1,067 1,060 1,053 1,041 1,041 France 849 863 866 868 864 the Netherlands 662 679 688 634 672 Germany 553 547 539 558 551 Belgium/Lux 319 321 320 344 350 United Kingdom 155 155 160 203 231 Iberia 416 252 253 266 26
Slide 32: Corporate employees by region
corporate employees by region average Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 North America 6,260 6,230 6,160 6,300 6,360 France 3,630 3,620 3,630 3,740 3,890 the Netherlands 4,300 4,270 4,360 4,560 4,720 Germany 2,520 2,480 2,500 2,610 2,690 Belgium/Lux. 1,840 1,770 1,890 1,980 2,070 United Kingdom
Slide 33: Staffing employees by region
staffing employees by region average Q3 2013 Q3 2012 North America 99,600 104,600 France 79,000 87,400 the Netherlands 78,600 85,300 Germany 49,900 52,100 Belgium/Lux. 43,700 47,500 United Kingdom 18,700 19,500 Iberia 55,100 46,400 Rest of Europe 49,600 37,200 Rest of world 111,400 112,800 total 585