UPDATE 1-Randstad's Q3 core profit tops estimates as markets stabilize

(Adds details, quotes from CFO, and background)

AMSTERDAM, Oct 22 (Reuters) - Netherlands-based staffing company Randstad posted a 2% drop in its third-quarter core profit on Tuesday, but beat analysts’ expectations as European markets stabilized amid a global industrial slowdown.

Adjusted earnings before interest, taxation and amortization (EBITA) came in at 298 million euros ($332.4 million) in the three-month quarter ended September, while analysts polled by Randstad had on average forecast EBITA of 291 million euros.

Randstad’s organic revenue slipped 2.5% to just over 6 billion euros ($6.69 billion), largely due to a decline in the automotive sector, which is reeling under the impact of the Sino-U.S. trade tensions and global political uncertainties, including Britain’s potential departure from the European Union.

The Netherlands-based company’s sales in Germany dropped 14%, roughly similar to the previous quarter, as Europe’s industrial powerhouse cooled.

“Germany is actually stabilising on a low level,” Chief Financial Officer Henry Schirmer said in an interview.

“The entire minus of 2.5% top line is automotive,” he said. “In Germany, it is part of a wider industrial issue and in the coming two quarters we do not expect to see dramatic improvement.”

Schirmer said activity in the Benelux region of the Netherlands and Belgium has also slowed, resulting in a 5% decline in revenue, as the German industrial downturn tricked through.

At the same time, Randstad saw its free cash flow more than double to 468 million euros in the three-month period.

“We are well-positioned at Randstad to end the year stronger. We are working in a macro environment, which is more subdued than last year, but you will not see us cutting down on very important strategic investments.”

$1 = 0.8966 euros Reporting by Anthony Deutsch and Bart Meijer; Editing by Clarence Fernandez and Sherry Jacob-Phillips