April 24, 2019 / 8:28 AM / 6 months ago

Staffing firm Randstad tops forecast as Europe steadies, North America grows

AMSTERDAM (Reuters) - Netherlands-based staffing company Randstad (RAND.AS) beat first-quarter earnings forecasts on Wednesday, helped by stabilizing markets in Europe, apart from Germany, and growth in North America.

FILE PHOTO: The logo of personnel service provider Randstad is seen at an office building in Zurich, Switzerland October 2, 2018. REUTERS/Arnd Wiegmann/File Photo

Shares in the company, which competes with Switzerland’s Adecco to be the largest global staffing company, rose more than 5 percent to 51.98 euros, their highest since September 2018.

The data add to recent signs the global economy might be slowing only gradually, rather than sharply as feared around the end of last year. Hiring trends are seen as a guide of future economic growth, as firms tend to take on fewer staff when they feel less confident about the future.

“Overall economic growth has come down, but has stabilized on a lower level,” Chief Financial Officer Henry Schirmer said in an interview. “People are staying cautious in the current climate.”

Randstad’s sales were nearly flat at 5.7 billion euros ($6.4 billion) in the first three months of the year. A 10 percent fall in key market Germany was offset by growth in the United States and stabilizing markets elsewhere in Europe.

The fourth quarter of last year saw a sharp downturn in business, with the U.S.-China trade conflict and Britain’s planned departure from the European Union casting a shadow over global growth prospects.

Randstad said its underlying earnings before interest, taxation and amortization (EBITA) rose 2 percent to 227 million euros. Analysts polled by the firm had on average forecast 207 million euros, down from 217 million a year earlier.

ING analysts said the company outperformed U.S. rival Manpower “in all key regions except France (in line) and especially in Southern Europe.”

Brokerage KBC increased its target price on Randstad stock to 49 euros from 44.50 euros.

Randstad said that, based on April figures, it expected its current sales growth trend of about 0.5 percent to continue, with slightly higher gross margins in the second quarter.

Germany remains a concern, Schirmer said: “We are winning market share compared to our competitors, but Germany is still pretty hard hit.”

($1 = 0.8917 euros)

Reporting by Anthony Deutsch; Editing by Rashmi Aich and Mark Potter

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