in millions of € 2014 2013 organic ∆%
Revenue 1,451.3 1,434.9 13
EBITA 7.5 10.1 11
EBITA margin 0.5% 0.7%
Revenue in the 'Rest of the world' region grew by 13%
organically. However, on a reported basis, revenue grew by 1%, mainly due to negative currency mix effects.
Japan
Japan represents 32% of the ‘Rest of the world’ region, and Randstad holds the sixth position. In 2014, we invested in expanding our position in Professionals, permanent placements, and outplacement and in our own IT platform.
Overall, revenue grew by 7.0% year on year, with both blue-and white-collar Staffing blue-and outsourcing showing strong performance. Permanent placements for entry-level jobs grew by about 80%, with strong demand from clients due to shortage of talents in the market caused by the low
unemployment rate in Japan (below 4%). Inhouse successfully expanded the number of locations to 25. Professionals further expanded its business under the new leadership. Having introduced new business concepts, Professionals showed strong performance, creating high expectations for 2015.
Operational improvements were achieved through the implementation of activity-based field steering (ABFS).
We hosted the Randstad Award event, which was attended by about 800 participants. This was the largest employer branding and HR professionals networking event ever held in Japan. Furthermore, we set up a monthly roundtable discussion for HR executives and professionals, providing the latest insights into the world of work. One of the discussions was co-hosted by the Dutch Embassy in Tokyo. Finally, we started our partnership with VSO Nepal, and sent two volunteers on a placement in a tourism promotion project.
Australia and New Zealand
Our operations in Australia and New Zealand returned to growth (FY 2014 +17%) across both temporary and permanent recruitment. Overall, the blue-collar industrial business achieved strong results in revenue and gross profit, with positive developments in the transport and logistics segments. Our early childhood and specialist education business also achieved solid results throughout the year, with a promising start in the specialized schools segment. Within Professionals, construction, property and engineering showed strong performance. Randstad Technologies achieved 20%
growth year on year, as our reputation for providing expert IT recruitment and technologies solutions grew. We saw good growth in the public sector, with both state and federal government departments growing. The improving consumer, business and hiring confidence led to good results across our Business Support, Assessment Center, Call Center, and Banking
& Finance divisions.
India
In 2014, the Indian economy continued to be volatile and, compared to 2013, witnessed increased optimism towards the latter part of the year. Our business in India continued to focus on profitability, emphasizing client quality, resulting in clear signs of returning growth in the second half of the year.
In particular, there was above-market growth in the permanent placements business, on the back of investments made in streamlining and integrating the permanent placements business across the branches to build client intimacy and serve clients better.
China and other Asian countries
The strong performance of our Chinese business in 2013 accelerated into 2014, making it an exceptionally strong year.
We achieved high double-digit gross profit growth, driven by our Search & Selection business and supported by continued investments in headcount in line with our strategy to become a leading player in the Professionals market. This strong performance was visible across the board, but especially in our main segments of manufacturing, FMCG, IT, and banking. We have three major centers for perm recruitment: Beijing, Shanghai, and Guangzhou.
Apart from this acceleration in our Search & Selection business, we also witnessed increased traction in the number of RPO deals that generated additional growth in permanent placements. To take advantage of the growing demand for high-volume recruitment project services, we will continue to invest in Randstad Sourceright in China. Our temporary staffing business more than doubled in revenue, with strong growth in terms of volume of projects as well as in project-based staffing. Our clients acknowledge the added value provided by the temporary staffing business. There was, however, a change in labor legislation in 2014, capping the number of payrolled temps companies are permitted to have, which impacted our payroll business.
Across the business, we improved productivity, which led to a strong incremental conversion from gross profit into EBITA. In 2014, Randstad China received recognition for a number of achievements and won several awards, including Best HR Services Branding in Greater China, Best HR Outsourcing Services Branding in Greater China, most reliable HR Services company, the 2013 appreciable tax contribution award, and the Shanghai Famous Brand. Our operations in China currently consist of around 600 staff. Having grown over 16%
in the past year, we anticipate further growth in 2015.
Outside mainland China, our business in Hong Kong delivered excellent revenue and gross profit growth. The continued investments in the teams and strict enforcement of ABFS is paying off for this relatively young Randstad company, although the final results were slightly impacted by the 'Occupy Hong Kong' movement in Q4. The best performing teams were Banking, Luxury/Retail/Consumer, and IT. These sectors are also the largest job markets in Hong Kong.
Temporary staffing revenue increased significantly, too. This was a result of increased focus on diversifying the revenue mix.
Singapore's economic growth remained low single digit in 2014, enough to continue to drive a healthy demand for our services, as Singapore is a full employment environment, with a culture in which people easily change jobs. Full-year revenue and gross profit growth were well above 30%, generating operational profit. In this very competitive market, we grew to market-leading positions in 2014 in Banking and Business Support, with solid performances also in Sales and Marketing, and in Accounting. We continue to invest in our Randstad
Sourceright activities, as the types of solutions offered fit with the needs of our regional buying clients.
Latin America
In Latin America, our Argentinean business remained under pressure, although our Professionals business showed strong growth. Our Brazilian business achieved strong growth under new leadership. In Mexico, we continued to expand our Professionals business and developed our Staffing business to diversify from large accounts. Chile improved its profitability under the leadership of a new management team.
EBITA for the 'Rest of the world' region remained unsatisfactory. EBITA margin dropped from 0.7% to 0.5%, and developments remain mixed. However, we are pleased with the progress seen in Australia and China.
annual report 2014 − Randstad Holding nv
Introduction
In this section, we provide an overview of the underlying performance per revenue category in 2014. More detailed information on these service concepts can be found in the section 'Value for our clients and candidates'. In our financial reporting, we have merged these service concepts into three revenue categories: Staffing (including HR Solutions), Inhouse Services, and Professionals (including Search & Selection).
Staffing (including HR Solutions)
in millions of € 2014 2013 organic ∆%
Revenue 10,202.8 10,037.9 1
EBITA 421.1 343.1 23
EBITA margin 4.1% 3.4%
In the revenue category Staffing we include the service concepts of Staffing and HR Solutions. Within Staffing, we serve clients in the industrial segment (blue-collar) and administrative segment (white-collar). In our revenue mix, this is about 50:50. HR Solutions includes a wide range of services, of which Payroll Services, RPO, MSP, and Outsourcing are the largest services. HR Solutions is well-established in the Netherlands and North America, while we have implemented a number of initiatives to further diversify our service portfolio in Europe and Asia. One of our priorities has been to achieve a greater share of permanent placements in our Staffing businesses. In 2014, we continued our progress in this regard, with permanent placements increasing proportionately.
Staffing revenue was € 10.2 billion. On an organic basis, this was an increase of 1%. We saw good revenue growth in Asia and Latin America, and solid growth of 5% in North America.
There was a decline in Europe of 3%, which continues to be impacted by the transfer of business from Staffing to Inhouse.
Overall Staffing revenue showed a steady improvement in many businesses, with the continued focus on revenue quality having a clear benefit on the bottom line. Our focus on growing permanent placements in our Staffing business is starting to pay off, with growth of 16% in the year.
In North America, our continued focus on revenue quality and profitability is paying off. Revenue was up 5% organically, or 3% on a reported basis as a result of currency mix effects.
Staffing revenue was up 5% organically, based on a relatively stable pattern evident throughout the year. On top of this, we were able to improve our profitability. In HR Solutions, revenue also improved by 5%. RPO had a solid performance, while revenue in MSP saw strong growth throughout the year. Payroll Services also improved following new client wins.
In Germany, Staffing revenue was 3% below the level of 2013.
Revenue gradually softened throughout the year, as the impact of the price effect from equal pay and wage increases reduced through the quarters. We continued to optimize our
service delivery to our clients, by transferring business to Inhouse. In France, Staffing revenue was 7% lower than in 2013; however, profitability continued to improve largely due to the increased 'CICE' subsidies. In the Netherlands, revenue was 1% lower than in 2013, although the trend improved throughout the year. In Belgium, revenue was 1% above 2013. In the UK, revenue fell by 3%; here, we retain a strong focus on client profitability, and revenue has come under pressure as a result. In Iberia, revenue increased 6%, with a solid performance in Staffing.
In the 'Rest of the world' region, our Japanese Staffing business saw solid growth of 8% in 2014. We achieved good growth in the blue-collar segment, especially in the logistics and retail segments. In other Asian countries and Latin America, revenue grew by 8% and 17% respectively.
Underlying EBITA margin improved from 3.4% to 4.1%.
Operating leverage improved thoughout the year.
Professionals
in millions of € 2014 2013 organic ∆%
Revenue 3,424.5 3,306.9 4
EBITA 156.1 135.4 16
EBITA margin 4.6% 4.1%
Revenue in Professionals was 4% higher year on year.
Reported revenue was also 4%, with a small negative currency effect. Perm fees were 13% ahead of last year.
Our North American business contracted by 1%, mainly as a result of a decline in our IT business. However, we saw further signs of operational improvements in our IT business, offsetting the decline in demand from the banking and finance sectors.
In Europe, revenue from Professionals increased by 5%. Our Professionals business in the UK had a good year, and revenue grew by 3%. Growth was led by Construction/Engineering
Staffing Professionals Inhouse Services 2014: revenue € 17,249.8 million
Split by revenue category
21%
20% 59%
25%
20%
55%
2014: EBITA € 706.0 million
and Education, whilst our Healthcare business returned to growth. Our German Professionals business grew by 6%, driven by good performance in IT and Engineering. In France, revenue contracted by 2%, but despite this, our Healthcare business performed well. In the Netherlands, revenue in the Professionals business was 11% higher overall, with the trend improving during the year. Our Dutch Professionals business is well placed, with the business being aligned under the Yacht brand in 2015. In Australia, revenue grew by 19%, mainly driven by increased temp demand. Perm fees in Australia were 4% higher. Our Chinese operations grew 77%.
Profitabililty continued to improve, with the EBITA margin reaching 4.6%, compared to 4.1% in 2013. Profitability improvements were seen in many geographies, including North America, the Netherlands, France, Iberia, and the UK.
We will continue to focus on capturing profitable growth in these regions, while further improving our profitability in Australia.