Randstad to Return €632 Million to Shareholders as Net Profit Falls in Q4 2019
Dutch staffing company Randstad has announced plans to return €632 million ($680.8 million) to its shareholders as part of its capital allocation policy. The company also reported a decline in net profit for the fourth quarter of last year.
In a statement released on Tuesday, Randstad stated that it will pay an ordinary cash dividend of €2.28 per share and a special dividend of €1.27. The decision to return capital is seen as a reflection of the company’s strong balance sheet.
However, net profit for the quarter ending on December 31, 2019, was €161 million, a decrease from the €292 million reported during the same period in the previous year. The company’s preferred metric, underlying earnings before interest, taxes, and amortization (EBITA), also saw a decrease to €265 million from €364 million. These figures align with consensus estimates provided by the company.
Furthermore, revenue for the fourth quarter declined from €7.01 billion to €6.18 billion, falling short of the consensus estimate of €6.235 billion. The company also reported an 8.6% year-on-year decrease in organic revenue per working day and a decline in the EBITDA margin from 5.2% to 4.3%.
Randstad CEO Sander van’t Noordende acknowledged the challenging global macroeconomic environment and its influence on the decision-making of clients and talent. Despite this uncertainty, van’t Noordende highlighted Randstad’s ability to adapt and perform in these changing market conditions. He also noted that labor markets remain tight.
Looking ahead, Randstad expects the gross margin for the first quarter of 2020 to be modestly lower due to seasonality factors.
This news comes as the global staffing industry continues to navigate complex economic dynamics and workforce trends. The return of capital to shareholders signals Randstad’s commitment to managing its financial resources while striving to meet market demands.
Analyst comment
This news can be evaluated as a mix of positive and negative. The return of €632 million to shareholders is positive, indicating a strong balance sheet. However, the decline in net profit, revenue, and EBITA is negative. Analysts predict that the market will remain challenging, but Randstad’s ability to adapt and tight labor markets will support its performance. The gross margin for Q1 2020 is expected to be modestly lower.
