Key points first quarter 2010
- Revenue almost flat at € 3,039 million
- Organic growth1 per working day improving from -5% in January to +4% in March
- Gross profit2 reached € 575 million (-6%) with the gross margin coming down from 20.1% to 18.9%
- Operating expenses flat versus Q4 2009 at € 500 million or down 12% YoY
- EBITA3 amounted to € 75 million (+53%), with the EBITA margin reaching 2.5% (vs. 1.6% in Q1 2009)
- Adjusted net income4 attributable to holders of ordinary shares € 47.6 million; diluted EPS5 € 0.28 (vs. € 0.05)

"In a quarter that is historically the weakest of the year, we achieved a solid performance, thanks to cost control and careful attention to margins", says Ben Noteboom , CEO Randstad Holding. "In March, revenue recovered strongly, with the industrial segments leading the change. Our US and German businesses are well over last year's levels, while the Netherlands is still lagging. In the US, our professionals business has also returned to growth in March. Clients have clearly taken the message that with increased volatility, flexible solutions are the answer. We expect growth will also return and accelerate in many other specialized and professional segments, as well as in the Dutch market. Our people are ready to benefit from any opportunity. We have the capacity, while reinforced commercial programs are in place. Our prospects for the near future are better than they have been for quite some time."

First quarter 2010 by geography 1

The Netherlands
Revenue decreased by 14% organically, compared to -21% in the previous quarter. Tempo-Team and Randstad performed in line with the market. Due to the client mix and the focus of the Dutch economy the Dutch market is more late cyclical than other markets but the patterns are similar. The combined Dutch inhouse businesses, focused on the industrial and logistical segments, reached the turning point in March. Yacht, which is active in the more late cyclical professionals segment, remained below the market average. Pressure on the temp margin has stabilized. EBITA was maintained at a good level, with the EBITA margin reaching 6.2%, compared to 5.8% in Q1 2009.

France 2
Revenue increased organically by 1%, compared to -19% in the previous quarter. In staffing and inhouse services, light industry and automotive improved, whereas activity in construction remained at low levels. We were still below market but with staffing, inhouse and permanent placement gaining momentum, we expect to close the gap by midyear. We opened 3 inhouse locations for new clients, while we added another 9 in transferring clients out of the previous Vediorbis network. The professionals business was still down for the quarter but returned to growth in March. The EBITA margin (excluding the business tax reclassification) amounted to 0.0%, compared to -0.1% in Q1 2009. Regular operating expenses included costs for office closures and redundancies of approximately € 2 million.

Germany
German revenue increased by 10% organically, compared to -18% in the previous quarter. The revenue trend improved throughout the quarter in staffing and even more so in inhouse, driven by a strong pickup across all industrial segments. In professionals, the engineering/aerospace segment remained slow, whereas growth in the IT business accelerated. In the traditionally weak first quarter, the EBITA margin reached 4.3%, compared to 1.4% in Q1 2009. The German result included a wage cost related release of approximately € 2 million.

UK
On an organic basis revenue declined 6% year-on-year in the UK, compared to -19% in the previous quarter. Revenue in our combined staffing and inhouse services businesses showed double digit growth based on higher volume with existing clients and client gains. The year-on-year contraction in the professionals segment eased, while professional revenue was flat quarter-on-quarter including a sequential pick up in permanent placement fees. Recovery is ongoing in smaller segments such as Finance, HR and Media, while Engineering/Construction started to show sequential improvement in perm fees. The Education segment suffered from widespread school closures in January and tougher market circumstances but solid profitability was maintained. The Healthcare market faces some pressure. For the whole UK permanent placement fees were down 13% organically year-on-year while they were up 18% sequentially. The EBITA margin amounted to 2.2%, compared to 2.3% in Q1 2009.

Belgium/Luxembourg
Revenue came down by 2% organically, compared to -16% in the previous quarter. Tempo-Team continued to outperform the market. Randstad closed the gap by gaining some share in the industrial segment through a good performance of inhouse. The combined Belgian businesses returned to growth in March. Gross margin held up relatively well but costs were still relatively high. The EBITA margin reached 2.9%, compared to 3.3% in Q1 2009.

Iberia
Revenue increased by 7%, compared to -9% in the previous quarter. The Spanish business returned to growth, against easy comparables. The Portuguese business continued to do well, outperforming the market and showing double digit improved to 1.3%, compared to 0.3% in Q1 2009.

Other European countries
Growth in the other European countries varied but showed a strong rebound across the board. In Italy revenue still declined, but momentum is building and in March revenue was almost flat. Our Polish business continued to show significant growth. Growth in our Scandinavian business was very strong, while this was also the case in Turkey, Hungary, and Greece. For the combined region the EBITA margin reached 0.6%, compared to 0.1% in Q1 2009

North America
Revenue increased by 9% on an organic basis, compared to -13% in the previous quarter. Growth in our combined US staffing and inhouse services businesses was well above 20%. The US professionals business turned in flat revenue, based on a strong performance and return to growth in IT. The combined US professionals business returned to growth in March, including perm fees. The Canadian business was slightly down year-on-year but reached the turning point in March as well. The North American EBITA margin amounted to 1.5% compared to -0.3% in Q1 2009.

1 in the description of geographies and segments the organic percentages are measured per working day
2 for comparison purposes the € 8.2 million business tax reclassification has been excluded from French EBITA. In the segmental breakdown the amount is shown on a separate line.

Rest of the world
The Australian business returned to growth over the full quarter. The Latin American businesses (Argentina, Chile, Mexico, Brazil and Uruguay) showed double digit growth on average. Growth was maintained in India and China, while our Japanese business was still down over the full quarter but up in March. For the combined region the EBITA margin reached 0.3%, compared to -0.9% in Q1 2009.

Q1 2010 by segment

Staffing
Staffing revenue declined by 2% organically, compared to -17% in the previous quarter. The improvement is largely driven by demand from industrial clients. The administrative segments are lagging, with contact centers being a clear exception with a continued strong performance.

Inhouse
Inhouse services showed the relatively strongest improvement with organic growth reaching a level of 30%, compared to a decline of 9% in Q4 2009. As of March all our inhouse businesses are growing. Growth is primarily driven by a pickup in demand from our industrial and logistics oriented client base. Growth also includes client gains and transfers from staffing to inhouse, for example in France where we are transferring clients from the former Vediorbis network.

Professionals
In line with historical patterns, the professionals segment is lagging. Revenue declined by 11% organically, compared to a 23% decline in Q4 2009. The US professionals business returned to growth in March, only four months after the return to growth in our combined US staffing and inhouse businesses. The return to growth in the US was primarily based on a strong performance in IT. The Dutch professionals business is at the other side of the spectrum with a revenue decline of over 20% at Yacht, partly based on a relatively large proportion of sales in the late cyclical government sector, in the already late cyclical Dutch market.

Other
In March 2010 we increased our stake in Japanese Fujistaff from 16.6% to 20.5%.

In April 2010 we reduced the capacity of our syndicated facility from € 2,295 million to € 1,995 million. The maximum amount to be drawn on the revolver is unchanged at € 1,620 million, while the term loan was reduced to € 375 million. The repayment schedule of the term loan is now as follows: May 2012 € 105 million, November 2012 € 135 million, May 2013 € 135 million. The revolver continues to run until May 2013.

Outlook
The positive trends in our businesses that were visible in Q1 2010 continued into April. Economic indicators may show varying signs, in our business the recovery is broad-based, in terms of regions and segments. We now see healthy growth rates in all our inhouse businesses, based on recovery in manufacturing and logistics. Staffing is showing a rebound in most regions too while even the more late cyclical professionals business has returned to growth in North America in March. In addition, revenue from permanent placement fees are growing again since March. Altogether these trends are no guarantee for continued growth but they do provide confidence. We expect our markets to further improve the coming quarter. Operating expenses are expected to move up somewhat, as we may selectively invest in people and marketing.

Financial calendar
Publication second quarter results 2010 July 29, 2010
Publication third quarter results 2010 October 28, 2010
Analyst & investor days November 24 and 25, 2010
Publication fourth quarter and annual results 2010 February 17, 2011