Published : 2 years ago, on 25/04/2023

Recruiter Randstad beats Q1 earnings estimates despite hiring slowdown

By Romolo Tosiani

(Reuters) -Dutch recruitment firm Randstad reported better-than-expected first-quarter core earnings on Tuesday, despite a slowdown in hiring by companies.

The performance of staffing firms is seen as a bellwether for broader economic activity as companies’ appetite for hiring indicates confidence in the economy.

“So it’s less hiring but still good activity,” CEO Sander van ‘t Noordende told Reuters.

Van ‘t Noordende added the company saw a good performance in permanent employment in Europe but also in the U.S., despite that business being down it’s still at a level that is beyond pre-pandemic.”

The group’s underlying earnings before interest, taxes and amortisation (EBITA) were down 9% at 266 million euros ($293.90 million), but above the 260 million euros forecast in a company-compiled consensus.

The “macro economic environment remained challenging across our markets, which translated into lower hiring activities from our clients,” the firm said, adding that this trend continued into early-April.

Jefferies said in a note that organic revenue estimates could move down as comments on April, suggest a 5-6% organic revenue growth decline in the second quarter, below consensus for a 4% decline.

The stock was down 2.4% by 0706 GMT.

The company said organic revenue per working day declined by 4.2%, with North America down 10%, while Northern Europe slipped 6%. The Asia Pacific region was a bright spot with revenue up 4%.

Weakness in North America was mainly driven by an overall softening of demand in sectors such as manufacturing, transportation and distribution, along with administrative roles, Chief Financial Officer Jorge Vazquez told Reuters.

Peers PageGroup and Hays flagged slower hiring due to weakness in the permanent recruitment market as employers were turning to interim hires to ride out market uncertainty amid a tough economic outlook.

“The economy is not in a recession, it’s not in great shape either,” Van ‘t Noordende said, adding the key question is whether the central banks will continue to raise interest rates.

($1 = 0.9051 euros)

(Reporting by Romolo Tosiani; Editing by Christian Schmollinger, Sherry Jacob-Phillips and Sharon Singleton)