Investing.com -- Randstad (AS:RAND) delivered stronger-than-expected first-quarter results on Wednesday as a sequential improvement in its U.S. operations and generally steady conditions across most regions helped offset ongoing headwinds in Germany and France.
The staffing firm, which holds the title of the world’s largest employment agency, reported EBITA before one-off items of 167 million euros ($190.3 million), ahead of the 153 million euros forecasted in the company’s compiled consensus.
“We have made a solid start to the year. Our strategic choices, disciplined execution and operational agility enabled us to protect profitability during the quarter,” CEO Sander van ‘t Noordende said in a press release.
Randstad’s organic revenue dropped by 4.2% during the period, a smaller decline than the 4.7% expected.
In the U.S., the company highlighted continued progress in its operational business and noted a return to growth in its digital division.
Meanwhile, Randstad continues to face difficulties in key European markets, particularly Germany and France, citing the automotive sector as a drag on performance in Germany.
Gross margin came in at 19.3%, exceeding expectations of 19.1%. Randstad anticipates the margin will ease slightly in the second quarter due to seasonal trends.
Operating expenses before one-offs stood at 925 million euros, just above the 920 million euro consensus. The company expects these costs to remain largely unchanged in the second quarter.
Regarding the outlook, April trends are so far consistent with March, which had already shown improvement compared to the broader first-quarter average. But Randstad cautioned that visibility remains limited amid growing macroeconomic uncertainties.
The company expects gross profit margin to be “modestly lower” on a sequential basis, as some of the favorable factors from the first quarter begin to normalize. Operating expenses are projected to remain broadly stable quarter-over-quarter.
As such, Jefferies analysts believe this backdrop "should trigger" a mid-single-digit cut to second-quarter consensus adjusted EBIT of 186 million euros, and potentially a mid- to high-single-digit reduction at the adjusted EPS level.
Separately, RBC Capital Markets analysts said Q1 was "overall, a decent quarter, although we are unlikely to change our Q2 forecasts at this point." They reiterated a Sector Perform rating and "see greater upside for recovery in other staffers at this point."