Randstad Nv Unsp/Adr

Good day and welcome to today's Q4 and full year 2024 Randstad Analyst Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. You may register for questions at any time by pressing star 1 on your telephone keypad. We kindly ask you to limit your questions to one and one follow-up question. And now, I'd like to hand the call over to your host today, Mr. Sander on Nordende, CEO. Please go ahead, sir.

Thank you very much, Sergei, for that kind introduction. And good morning, everybody. I'm here with George and our investor relations team to share our Q4 and full year 2024 results. We continue to experience labor market challenges in Q4, which contributed to a 5.5% decline in organic revenue. We saw further stabilization in North America, while Europe remains a story of two tales. Southern European countries continued to grow, while challenging conditions in berm and automotive led to subdued demand in Northwest Europe. Against this backdrop, we delivered a gross margin of 18.8%, driven by business and service mix. With our continued focus on cost, we have delivered an EBITDA of 200 million euro, with an EBITDA margin of 3.3% for the quarter. For full year 2024, we delivered revenues of 24.1 billion euro, 7% lower year over year and an EBITDA of €754 million with a margin of 3.1%. I'm very proud of how our teams have navigated their markets during this year with a consistent focus on adaptability. In addition to our field steering, balancing supply and demand, we took decisive actions to reduce indirect costs and restructure the portfolio. While this impacted net income for the year, these actions position Ransap better to invest and execute our partner for talent strategy, as well as to respond to any growth scenario. Based on this performance and our solemn balance sheet, we will propose to pay a dividend of €1.62 per share, equating to €285 million. This proposal is in line with our capital allocation policy, and we believe it strikes the right balance between confidence in our business the ability to execute our strategy and attractive capital returns for our shareholders. Looking ahead to Q1, we of course remain laser focused on serving our clients and talents whilst carefully managing our cost levels. Entering 2025, we observed further stabilization across markets and I'm positive that the cost actions we have taken in 2024 And the progress we've made with our partner for talent strategy position as well to navigate the current environment. Let me now take you through some of the highlights of the execution of our partner for talent strategy. And I will tell you, I couldn't be more pleased with the progress we've made throughout the year. First of all, their specialization, a key pillar of our strategy. We have completed the implementation of the specialization framework in all our markets, which is an important milestone for our business. Because specialized teams and specialized delivery models differentiate us in the marketplace through a better understanding of client and talent needs, as well as competitive and pricing dynamics. We're also allocating additional capacity in our main geographies to our growth segments, including skilled trade and logistics and operational, and healthcare, finance, and engineering in professional. In enterprise, our investments in the life sciences growth segment are paying off with some great wins at Roche and Lonza. And of course, we acquired Zorgwerk, a digital marketplace making us the market leader in healthcare in the Netherlands. Delivery excellence is why Ransat is the preferred partner for talent for many organizations. We deliver what we promise, and the objective here is simple. to create the best and most efficient experience for our clients and talents. In 2024, we've launched over 45 specialized talent and delivery centers in 10 key markets. And these centers allow us to optimize talent attraction and delivery services, creating focused talent pools tailored to meet client demands. And as a result, we've seen a 20% increase in fulfillment across these centers in 2024. The Ransom Talent Platform supports our business end-to-end from initial client and talent engagement all the way through to payment and redeployment. And our vision here is to digitize the transactional aspects of our business to the max, whilst adding the personal touch where that truly adds value. Our digital marketplaces will be at the heart of our business, underpinned by a harmonized backbone for front, mid, and back office. And also here, we've made some very good progress in 2024. Firstly, besides Swordwerk, we acquired Torque, a next-generation AI-powered digital marketplace, providing skills-based matching to connect digital talent to clients. We now have more than 320,000 digital talent enrolled in the US, Latin America, and India. Over 2024, we launched our digital marketplace app in the US. The Ransat app caters to both clients and talent across various industries, empowering talent to select their own assignments while providing clients with immediate, reliable access to skilled workers. There are 440,000 talents on the platform with 60,000 active users every day. This means we now have around 1.5 billion euro revenue flowing through this platform. Finally, we've rolled out our harmonized front office system in the Netherlands and Belgium with more markets to follow in 2025. In short, the future is already here and we will roll out the Randstad Talent Platform at speed. The ambition is to have most of our key markets on the platform over the coming two years. And to give you more insights into these elements of our strategy, we plan to host an update on our Randstad Talent Platform in April, right after the publication of our Q1 results. In summary, in 2024 Randstad demonstrated resilience and adaptability in challenging markets. We've taken decisive action to ensure we enter 2025 as a stronger business than we came into 2024. And last but not least, we continue to invest in executing our partner for talent strategy, putting the Ransap Talent Platform at the heart of our business. With that, I'm going to hand over to George for some details on the financials.

Thank you, Sander, and good morning, everyone. As Sander pointed out, things stabilized, results are not better than in Q3. but in many ways still a difficult quarter to win what was a challenging year. With many actions that resulted in sizable one-offs and extraordinary accounting primarily items, there are only two positions for a better 2025 and beyond, but do require explanations. So let's start unpacking those and the broader underlying performance, starting with our key regions on page eight. Starting with North America, and in particular the United States, Hiring rates and firm remain very weak, but we do see early signs of optimism on the industrial side, with PMIs and staffing data slightly improving sequentially. Temp is likely to lead the recovery once again. However, it has yet to materialize in a meaningful step up in demand. Our numbers reflect this. Firm full-time hires are still pretty much frozen, declining 26%, but our overall revenue was again sequentially a notch better, down 7% versus 9% in the previous quarter. Our operational, with a major presence in industrial staffing, is now declining by 4%, but in-house, our larger clients continue to grow as we are called to support increased demand. In the other specializations in Q4, we see some sequential improvement in professional, digital, and enterprise. In Canada, the market has not yet improved, and we saw our growth further decline in Q4, where seasonal pick-up and sour demand in berms impacted our business. The EBITDA margins stood at 3.4% due to the overall impact of FIRM and the fast decline of our RA high and margin-exclusive businesses. Moving on to Northern Europe on slide nine. In Northern Europe, as with Q3, automotive and related production declined further, but transport and logistics experienced growth. Revenue declined 7% as slight sequential improvements. While most countries improved sequentially, the macroeconomic background remains challenging. Approximately half of our restructuring efforts, we'll talk about that later, were in this region. Here, the bench model used in many markets particularly weighs on idle time and sickness. Zooming in into the Netherlands, growth deteriorated to minus 10%. The environment is stable at low levels, but manufacturing shows little signs of improvements. Professional talent solutions were down 11%, whilst professional talent solutions slowed to minus 3%, as we saw still additional pressure in the admin and clerical segments. We welcomed, and we're quite happy, the team of Zollwerk to Ramstad, strengthening our position in one of our most strategic growth segments. EBITDA margin for the Netherlands came in at 4.6%. To the east, the economic environment in Germany has remained relatively unchanged, and our growth rate has sequentially improved to minus 8%. The automotive sector obviously continues to be under pressure, and we do continue to see elevated idle time costs in sickness and few hours' work per employee. At the same time, The streamlining of operations continues and allow us to focus now on our commercial activity and new wins in new segments, positioning us for growth in our four specializations. Belgium shows true underlying sequential improvement, is now flat year on year. Manufacturing and transport and logistics, our largest end markets, are now returning to growth. We are leveraging on the strengths of a very well diversified portfolio. Operational talent solutions was up 3%, while professional talent solutions improved to down, still declined 7%. EBITDA margin came in at a strong 4.9%. Other northern European countries reflect a little bit of mixed performance, and let me summarize it to you. Poland is growing 6% year on year, still growing strong. Switzerland was down 2%, and the Nordics deteriorated further, more on that later, down 26%. EBITDA margin came in at 1.4%. Now moving on to segment Southern Europe, UK and Latam on slide 10. In Southern Europe, trends diverged, or in this bigger region, trends diverged a bit. Our real Southern countries continued to show profitable growth whilst we saw hiring confidence, and in particular on the automotive sector, weakness deteriorating in the UK and France. Italy continued to demonstrate positive growth. We continue to invest in growth segments such as IT, healthcare, and skilled trade units. As a result, our professional talent solutions are up, plus 15%. The industrial environment was sequentially tougher, but not immune to the automotive sector. Operations talent solutions declined 2%. Notably, though, Italy still shows a solid EBITDA margin of 6.2%. In France, the political uncertainty is impacting business confidence. Permanent hiring and the professional and markets were the most under pressure. In professional talent solutions, France was down 15%, and digital talent solutions are also declining, given its exposure to the broader, in our case, automotive sector. Idle time and bench year also weigh on the gross margin. OTS, though, operational talent solutions growth was down 5%, reflecting primarily headwinds in automotive sector. On the other hand, our transport, logistics, and manufacture continued to improve sequentially. The EBITDA margin was 4.1%. For the south, Iberia. Iberia stabilized at a high level, growing 5% this quarter. Spain once more showed robust growth, with a 9% increase, mainly driven by strong performance in operational talent solutions, supporting clients' increased demands. This progress shows the return on the target investments in growth we've made over the last year, segments such as skilled trades, logistics, and e-commerce. RPO is also up double digits. We remain with many opportunities to grow further in Spain. Revenue and profit performance. Now let's look at the southern European countries, the UK and Latin America. The UK labor market continued to soften, and we were down 12% this quarter. In Latin America, Brazil is profitably growing at 11%, offset partially by weaknesses in Argentina. And now let's move to Asia Pacific on slide 11. Asia Pacific region continues to recover. Japan demonstrated a decent performance against very tough comparables, stable growth, but with strong profitability. Here we continue to see our investments from the last quarter paying off. Our digital specialization continues to expand, and consistently breaking records, growing now at 16% in this quarter. In the clear candidate scarce markets, we see significant opportunity for our sector with ample room to grow. Australia and New Zealand improved sequentially, declining by 8% in the quarter. India grew by 13%, confirming the opportunity and benefits of focusing on our four specializations. Overall, the EBITDA margin for APEC was a sound 4.3%, showing strong operational discipline. And that concludes the performance on the region.