Japan
In Japan, which represents 37% of the 'rest of the world' region, we are the no. 6 in the market. We provide a wide range of services, including blue-collar and white-collar Staffing, Professionals, Outsourcing and Outplacement.
Despite the challenging economic conditions, we outperformed the market and revenue grew by 6%.
Our white-collar business performed in line with the market and we focused on implementing the field steering model.
Our blue-collar business achieved strong growth, especially in the logistics and retail segments. Our Outsourcing business saw strong growth in demand, and focused on diversification of its production lines. The Outplacement division had a successful end-of-year.
We were well prepared for the legislative changes. Although the impact on the industry is limited, we used the momentum to make sure our clients were well informed about the changes and the impact on their business. We did that by hosting some ten seminars across the country.
In 2012, we were voted overall no. 1 in an industry survey focused on flexworker satisfaction. We were also involved in the sourcing of 80 bilingual and trilingual secretaries for the 2012 IMF and World Bank Group meeting in Tokyo. In
addition, we were engaged by several governmental bodies to support unemployed youth and disabled people in finding a job.
We witness a trend that Japanese companies are rapidly expanding abroad, and we are well positioned to service these clients in their HR needs.
Australia and New Zealand
Australia and New Zealand, which represent 28% of the 'Rest of the World' region, experienced challenging market conditions in a two-speed economy, driven by global economic uncertainties and the mining and resources boom in Western Australia. Revenue remained relatively flat
throughout the first half of the year, but the trend weakened towards the end of the year, most notably in Professionals. As a result, revenue contracted by 5%. Overall, temporary staffing performed better than permanent placement throughout the year. We continued our investments in key geographies, for example in Western Australia, as well as in our Mining, Resources, Oil & Gas divisions in Queensland, which are gaining in traction.
Randstad Sourceright enjoyed some major MSP wins throughout the year and our Education business achieved good revenue, as well as profitability growth. The Business Support and Industrial divisions faced lower demand, despite good performance of our specialist Sales, Marketing &
Communications division. The Public Sector-oriented businesses came under pressure, as did the Banking &
Financial services and IT sectors, with global economic uncertainty translating into reduced demand for talent.
To grow our large accounts, we focused on adapting our service delivery models, while also increasing our focus on the SME market to drive permanent placements and margin growth. In addition, we continued to strengthen our specialized account management program, leading to efficiencies and providing true value for clients.
In November, we won the SEEK Annual Recruitment Award for Best Large Specialist Recruitment business in Australia (and were runner-up in New Zealand), demonstrating our work in candidate care is being valued and recognized in the market.
The Randstad Workpocket was successfully launched for the first time in Australia, and together with the Randstad World of Work Report, the Randstad Award and our no. 1 position in terms of our media share of voice, Randstad continues to be well positioned as the leading HR authority in the region.
India
Randstad continued to be a leading player in India. We completed the rebranding process from Ma Foi Randstad to Randstad successfully. Our business has been growing by around 14%, despite a slowdown in the Indian economy. The growth was led by temporary Staffing in both Professionals and the general Staffing business, while the permanent placement business was affected by the decelerating
economy. Here, we made some organizational changes to ensure better client coverage in our key markets.
We focused on productivity improvements, also by further strengthening our internal organization. We established a large Randstad office (the 'Randstad House') by combining the corporate and branch offices in Chennai. This is the largest global office for Randstad and will seat 325 employees. Our focus on building the Randstad brand, improving profitability and enhancing field steering will continue.
China and other Asian countries
Our business in China continued to perform strongly and achieved double-digit growth in revenue and gross profit. All businesses performed better than the market, and growth was led by segments such as FMCG, Services and IT.
In 2012, we commenced the Search & Selection growth accelerator project. Some 60 consultants have now joined the program. This has enabled the business to grow in new sectors, including life sciences & pharmaceutical, property &
engineering, luxury goods and construction. To support the program, we opened our second large Search & Selection branch in Shanghai, which also serves as a training and development center. We continued to strengthen our service delivery models and we introduced Randstad Sourceright to grow our RPO offering.
During the year, Randstad China was honored with a number of achievements and awards, including HRoot’s 'Best HR Services Branding in Greater China 2011-2012' award, chosen from among more than 300 HR service companies.
Outside of Mainland China, our Hong Kong business continued its rapid expansion with solid double-digit growth in gross profit, and increasing headcount by more than 50%.
We continue to position ourselves as a leading Professionals recruiter, with strong growth in the banking & financial services, FMCG and luxury retail segments.
In Singapore, we witnessed good growth in Staffing, and we focused on building a strong foundation in Professionals. The company is now positioned for growth in a promising market with strong demand for highly skilled, professional talent and one of the world’s lowest unemployment rates of around 2%.
Malaysia is an attractive, growing market, which is characterized by low unemployment rates and growing foreign business investments. In Malaysia, Staffing revenue remained flat during the year, although we achieved good performance in the second half of the year in Professionals and in RPO projects.
Throughout the Asia-Pacific region, we have strengthened our managed services capability with further investments in our Randstad Sourceright business in Singapore, Malaysia, China, Hong Kong, Japan, India, Australia and New Zealand. With large multinationals seeking talent sourcing and management
solutions across borders we have grown our RPO business through regional collaboration and secured a number of large contracts, including the first truly regional MSP program with a leading US company that has more than 3,000 contractors under management across Singapore, India, Australia and the Philippines.
Latin America
Continued investments in our Brazilian company enabled us to expand our branch network, while strengthening our infrastructure and brand awareness. We also launched the Professionals and Technologies businesses. All of our businesses achieved strong growth in 2012.
In 2012, we increased our share in our Argentinean subsidiary SESA Select to 100% and we rebranded the business as Randstad. We expanded our footprint by starting Inhouse Services and Professionals, while focusing on client profitability in the remainder of the business.
In Chile, our Professionals business strengthened further and our Mining & Engineering businesses reached a leading market position.
Operational results in the 'Rest of the World' region remained unsatisfactory. However, developments were mixed. Our Japanese business made a substantial improvement in profitability, while we continued to invest in Asia and Latin America. Our Australian business was under pressure, mainly as a result of a dissappointing fourth quarter. Underlying EBITA for the region was adjusted for restructuring costs of
€ 0.9 million and for € 3.2 million, which was related to the impairment of Japanese real estate.
introduction
Randstad offers five distinct service concepts: Staffing, HR Solutions, Professionals, Search & Selection and Inhouse Services. Within each service concept, we have multiple ways of delivering our service to our clients. Our service concepts are based on best practices and proven procedures. More detailed information on these service concepts can be found in the 'strategy' section. In our financial reporting we have merged these service concepts in three revenue categories:
Staffing (including HR Solutions), Inhouse Services and Professionals (including Search & Selection). In this section, we provide an overview of the underlying performance per revenue category in 2012.
staffing (including hr solutions)
In the revenue category Staffing we include the service concepts of Staffing and HR Solutions. Within Staffing, we service 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 2012, we made good progress in this regard.
Staffing revenue was € 10.6 billion, at a similar level as last year. On an organic basis, revenue contracted by 7%. We saw good growth in Asia and Latin America, but revenue declined by 8% and 10% in Europe and North America respectively.
We witnessed a gradual decline throughout the year, which was partly driven by continued transfers of business from Staffing to Inhouse.
Our North American staffing business doubled in size following the acquisition of SFN. During the year, we implemented our Inhouse concept at SFN's on-site business. In addition, we paid attention to client profitability and safety.
This resulted in terminating a number of contracts in the second half of 2012. As a result, and adjusted for the transfer of SFN's on site business, Staffing revenue grew by 3%. In HR Solutions, revenue grew by 13% due to many new client wins in RPO and MSP. The 2012 'VMS and MSP Supplier
Competitive Landscape report' ranked Randstad as the global no. 3 in the category 'Managed spend' and no. 2 in the category 'Master supplier'. Randstad Sourceright is now also the leader in the RPO industry in the US.
In France and Germany, Staffing revenue contracted by 10%
and 9% respectively. This was in part due to the increased macroeconomic uncertainty in these countries, which directly impacted demand in the industrial segments. This caused an increase in the rate of decline in the second half of the year,
albeit that the rate of decline stabilized by the end of the year. In France, we continued to transfer business to Inhouse.
These transfers enabled us to gain further market share at these clients, while our consultants at the branches are better able to focus on specialties and the SME segment. Dutch Staffing revenue contracted by 3%. The rate of decline was fairly stable throughout the year. We achieved strong growth in payroll services and returned sound profitability for our Dutch businesses. Randstad the Netherlands outperformed in the administrative segment of the market, while Tempo-Team gained share in the industrial segment. The Dutch staffing market remains very competitive, however. In Belgium and the UK, revenue contracted by 9%, based on similar trends as in France and Germany. The Staffing businesses in Iberia suffered from a challenging economic environment, most notably in the industrial segments. Here, too, the rate of decline stabilized towards the end of the year.
In the 'rest of the world' region, our Japanese Staffing business grew by 2%. Strong growth was achieved in the blue-collar segment, especially in the logistics and retail segments. We performed in line with the administrative market. Good growth was achieved across Asia and Latin America.
The underlying EBITA margin reached 3.3% compared to 3.9% in 2011 and reflects ongoing price/mix effects in a number of countries, such as the Netherlands, Germany and across Southern Europe. On a pro-forma basis, assuming the consolidation of SFN in 2011, the EBITA margin in 2011 would have been 3.7%.