EU CONSUMER CYCLICALS: Randstad; FY (to Dec) results
(RAND; Baa1/NR) (Equities -4.3%)
Co reported its 8th straight quarter of falls this morning. It is the lowest levered of the big-3 but has still managed to push leverage outside Moody's Baa1 threshold - courtesy of unch equity payouts that came in at at 2.5-times FCF. €29s are pricing the downgrade and some more at Z+90 (wide end of consumer services). It says January shows a stabilisation in volumes but similar development in organic revenues to 4Q (which was -5.5%). We don't place much weight on co's guidance - it has been recycling the word "stabilisation" for a few quarters guidance now. Q1 results come late April.
- Q4 organic revenue -5.5% to leave FY -7%
- Southern Europe, UK and LATAM -4% vs. Q3 -2% (largest regions; France -8%, Italy +1%, Iberia +5%)
- Northern Europe -7% vs. Q3 -8% (largest regions; Netherlands -10%, Germany -8%)
- North America -7% vs. Q3 -9%
- NA is 20% of group, France 15%, Netherlands 12%, Italy 9%, Iberia 8%, Germany 7%
- adjusted EBITA margin 3.3% (-100bps), FY at 3.1% (-110bps)
- FY reported EBITA including €182m in one-off costs was €572m (-38%yoy) on a 2.4% margin (noting it had €152m one-off costs last year too)
- FY reported EBITA including €182m in one-off costs was €572m (-38%yoy) on a 2.4% margin (noting it had €152m one-off costs last year too)
- FY FCF over halved to €319m (-64%) on the earnings fall but also negative WC swing (day-sales-outstanding went up by 1.6 days)
- Note the upcoming Q1/2 are seasonally weak for FCF
- Above did not stop €413m in net acquisition spend and another €818m in equity pay-outs
- This years dividend is at €1.62/share or €285m (it historically has done specials on top of the annual)
- g/n debt of €2.2/€1.85b to leave it levered 2.7x/2.2x - up 1x from last year
- one of its acquisitions was into Torc, "next-gen AI powered digital marketplace" - it has 320k talent enrolled in US/LATAM and India.
- Sees stabilisation in volumes and sees January organic revenue growth in line with Q4 trends (which was -5.5%)
- "In Q4, trading conditions continued to stabilize in some markets, though business hiring and overall client confidence remained muted."
- Says labour market still 'stuck'; "low hiring levels, quit rates are low, and not a lot of layoffs going on either. Two factors are at work. The unwinding of over-hiring in COVID as well as the level of uncertainty in the minds of our clients is still quite high."
- US showing signs of a positive backdrop, Italy and Spain continuing to do well while rest of Europe remains challenged.
- gross margin to expand modestly and operating expenses to be down modestly
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