INTERVIEW: Randstad CEO Sees No Recovery; Eyes White-Collar Jobs
June 23 2009 - 11:10AM
Dow Jones News
Randstad NV (RAND.AE) Chief Executive Ben Noteboom said it was
too early to talk about a recovery in the staffing industry, but he
was confident the sector will grow, albeit slowly, once the economy
recovers, particularly in the lucrative segment for white-collar
professionals.
Noteboom told Dow Jones Newswires in an interview Monday that
the short-term outlook for the Dutch employment agency remained
cloudy. Randstad in April didn't rule out an acceleration in
revenue decline for the second quarter as visibility was extremely
low.
"The recent talk of green shoots in the economy is premature,"
Noteboom said. "You sometimes see signs of a recovery, but you
don't know by what these are caused. It's too early to say the
market is improving."
The staffing sector has been roiled by the economic downturn as
demand for temporary and permanent labor has plummeted. In the past
quarters, Randstad has reported double-digit revenue declines in
all of its markets, including the U.K., France, Germany and the
Iberian countries.
The company is one of the world's largest employment agencies.
It competes with Switzerland's Adecco SA (ADEN.VX) and U.S.-based
Manpower Inc. (MAN), which also have seen their profits crimped by
sharp revenue declines.
Noteboom is confident that big players are well-placed to
survive recession. "History shows market leaders emerge stronger
from a downturn than smaller players," he said. "This will happen
again."
The staffing sector would grow once the market stabilizes,
according to Noteboom, who added that some sectors proved to be
resilient, including the government, education and health care
sectors.
Randstad's CEO sees potential in the white-collar segment, where
staffing companies are still less active compared to the
blue-collar segment.
"It will take a while, but this segment will stand out, due to a
rising penetration rate, an increasing demand for higher-educated
staff in our regions, and because the segment is still very
fragmented," Noteboom said. He expects to fill the gaps that
smaller players leave behind, as many are expected to go out of
business during this downturn. "Consolidation is, therefore,
inevitable," he added. "Randstad is already well-placed in the
professional segment, and will play an important role in that
process."
In 2008, Randstad generated around 17% of its revenue in the
white-collar market, where it fills jobs in sectors like finance,
engineering and health care. This segment is more profitable than
others, which is why rivals like Adecco are also looking to expand
in this area.
Noteboom also saw long-term growth opportunities in India and
China. Although Randstad's operations there are relatively small
and haven't delivered "terrific profits" yet, Noteboom is confident
that "my successors will thank me that we built up a position in
these countries."
"In India, we're talking about a middle-class working population
of 300 million. Revenues are still low because of the low wages
there, but salaries are rising 10% to 15% each year. In the long
term, both India and China are huge markets and that's what we're
focusing on now."
Randstad in April posted a EUR52.6 million first-quarter net
loss. At 1433 GMT, Randstad shares traded down EUR0.26, or 1.4%, at
EUR18.84 in a broadly flat Amsterdam market. Its shares have gained
about 30% since the start of this year, outperforming the AEX
market, which has gained 2%.
-By Maarten van Tartwijk, Dow Jones Newswires; +31 20 571 5201;
maarten.vantartwijk@dowjones.com