October 24, 2017 / 7:31 AM / a year ago

Randstad shares drop as quarterly growth fails to impress

AMSTERDAM (Reuters) - Randstad (RAND.AS), the world’s second-largest staffing company, suffered hefty one-off costs at U.S.-based Monster Worldwide which it bought last year, helping send its shares sharply lower as quarterly results offered no positive surprise.

Randstad, which ranks behind Adecco (ADEN.S) in the sector worldwide, said its third-quarter operating expenses included

21 million euros ($25 million) related to cost-cutting efforts at job hunting portal Monster, acquired in 2016 for $429 million.

Randstad shares, which had risen nearly 7 percent over the past three months, were down more than 5 percent in early Amsterdam trading at 51.77 euros, taking the stock to its lowest level in a month.

Brokerage KBC Securities, which maintained its “accumulate” rating on the stock, said the share price fall was due at least in part to relatively high restructuring costs at Monster.

“The investments in digital and in restructuring Monster continue to put a lid on operating leverage (and) margin expansion,” KBC said in a note. “The stock has been strong into the results and we think there is little in this Q3 to move the stock higher.”

Randstad’s revenue rose 10 percent to 5.87 billion euros, while underlying earnings before interest, taxation and amortisation (EBITA) increased 6 percent to 288 million.

Analysts polled by Reuters had on average expected sales of 5.9 billion euros and EBITA of 288 million.

The key area for growth was Europe, where sales were up 11 percent overall, driven by even higher double-digit increases in Spain, Italy and France.

“There is growth across the whole of Europe,” said Chief Financial Officer Robert Jan van de Kraats. “All markets are growing and the driver behind that is blue collar workers.”

Randstad said it expects a similar performance through the rest of the year.

Although some sectors are beginning to develop labour shortages, such as Dutch construction, van de Kraats said there was little sign of wage increases.

($1 = 0.8505 euros)

Reporting by Anthony Deutsch; Editing by Gopakumar Warrier and David Holmes

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