Earnings Call: Q1 2021

Apr 21, 2021

Hello, and welcome to the Randstad First Quarter Results for 2021. My name is Jeff, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. I will now hand you over to your host, Jacques van den Broek, CEO to begin today's call. Thank you. Yes. Thank you, Jess. Good morning, everybody from sunny Amsterdam, which I think is symbolic for the numbers we Presenting with you this morning. I'm in our conference room at head office together with Bishra and Steve from IR and of course, Henry. And I'm wearing a suit. Maybe you can't hear that, but I'm wearing a suit. So that's been a long time ago. Yes, we had a solid start 2021, as you can see. And as we said before, we feel we're stronger and very well positioned for what we called in our press release a Truly dynamic world of work. What we mean by that is that it's not business as usual. It's going to be about talent strategy, scarcity, immigration, reskilling. So very interesting to be in this space. We generated a strong set of results in the Q1 growing 6.4% And very positive momentum across all of our geographies despite still a lot of local lockdowns and of course still macroeconomic uncertainty. We created for you a new slide relatively, which is going to be the next one, just to Show you that in a way 2020 is a less relevant year. Normally, we compare, of course. But now, we benchmark ourselves against 2019, and that's what we would like to show with you to show you and share with you. We exit the quarter with double digit revenue growth, But activity momentum in April 2021 is, as I said, reaching these levels of 2019. We continue to see good momentum We already welcomed 1,000 new colleagues. And again, most of them have been inducted virtually. And but at the same time, we also improved our productivity. Most of these people came in at the end of the quarter. So their productivity is still relatively low, but still good to see that overall we improved the productivity. That delivered, of course, a solid EBITDA margin for the quarter and a strong recovery rate. Almost all regions grew in Q1 With outperformance in markets such as the U. S, France, Belgium, but we're also ahead of market in Argentina and Brazil, And they delivered an outstanding performance, a little bit more on that when I comment around rest of the world. In house, the eternal winner, Fortunately, our business mix continues to perform well, and we're very pleased to see our industry fundamentals are reconfirmed The staffing penetration rates bouncing back quickly, which, for example, is very interesting in countries like Italy but more than later. Our NewWave program continues to help clients operate safely and efficiently. And as markets gradually reopen and people start returning to the workplace, We are ready to support them as they adapt to the rapidly evolving global economy. There's going to be work for almost everybody. We're going to be short of people, but at the same Underlying, there needs to be massive rescaling from mostly white collar jobs into technology, engineering, education, health care, E Commerce, those kind of sectors. Our first priority still is the health and safety of our employees, candidates, clients and other stakeholders. And I would once again like to thank my Randstad colleagues for their incredible commitment and dedication during these extraordinary times. So let's go to the next slide, which I already introduced. And you can see the yellow line that is 2021. We're really, really getting close to April to 2019 in April. So very happy with that. As said, because it's so tough to call, you're probably going to ask us a lot of questions about the trend. And What remains is the visibility, right? So it is 6 weeks, but yes, as always, so far so good. The strength of our performance in this Q1 gives us confidence for the remainder of 2021. But we still, of course, have cautioned this morning, I heard Boris Johnson say that There might still be we need to live with the virus. That's true. But for us, so far, so good. So the 1,000 people, That is a large beginning, but it might still be that we take in more people as we see more momentum in many markets. So let's go on the next slide to our 2 biggest markets, North America. Yes, they continue to grow, very strong growth of staffing, mentioned in former calls the many new on sites That we opened in our in house business and that, of course, helps to grow. Yes, and it's getting tougher to find people Already in our staffing business. 12% growth in staffing and in house, 7% in Q4, so speeding up. As you know, in house is mostly in sectors like logistics, food, retail and the likes. U. S. Proffs, a mixed picture, definitely resilient performance of our Technologies business. And of course, it was stable throughout the year. The U. S. Has still relatively tough comps compared to Europe because in Q1 last year, the business didn't go down. So this growth is very strong. In the U. S, in the beginning of the year, Jan and Feb, we had some margin issues On state unemployment insurance, we have a specific group in our IT business. They are immigrants. They work H1B visas and we have them on our payroll. We support them. But in the beginning of the year, we had some idle time in Jan and Feb That in March is already largely out. So the overall margin in the U. S. Is back to normal levels, I might say. Then France, yes, for already three quarters. France is a very happy story, which is not so much maybe the economy of the country, But we do very well. Ahead of market, we continue to see strong demand in sectors such as food retail again, health care, We're by far a market leader in Healthcare in France, Logistics and Driving in House to Growth in the quarter. Also, props Turning into growth territory, mainly driven by our Healthcare business. And we observed continued recovery in the perm fees, Growing again 3%. So very nice surprise there. Again, mainly driven by proffs and Improves. I want to we want to single out, I want to single out OZ. So OZ is our Statement of Work Business in IT and Engineering, Well, we made quite some changes. The new leadership, we appointed Jerome Ontard. Jerome has been with the business many years. He ran The business outside of France, we named Jerome CEO, bought in a new CFO. And Jerome and his team really get back to work. And mainly our French business is not well positioned in terms of Sectors when you look at COVID, so Aeronautics, Airlines, but they really did an excellent job on Improving the productivity and how do you call it diminishing the bench in France. So that really helped our The results in France. So well done, OC team, and we like more of that. I know they're on the call, that's why. The Dutch business, yes, again, strong performance there. We're getting closer to market, So good. We see continued recovery in the automotive and manufacturing, while again sectors of health care and e commerce continue to perform very strongly. We opened 19, 19 new in house locations this quarter alone, so very strong start of the year. And we do expect this to help our revenue going forward. Randstad and Tempur team up strongly and Yacht Already strong performance last year, but they exceeded 2019 levels, which we think is a remarkable performance in these volatile teams. So very well done, Joab And also, BHM, say, our acquisition in this field. EBITDA margin came in strong, 6.4 Strict cost management, but also less sickness. We carry our own sickness risk in the Netherlands, and that helps in this case in margin. Germany, growth again. 2018 was the last time we saw growth. So 5% this quarter, strong recovery through the quarter And very prolonged certainly in Germany macroeconomic headwinds, which started in the second half of twenty eighteen, as I said. Industrial sectors like Automotive and Manufacturing continue to recover. And at the same time, our new waste program, we've seen increased commercial activity in our German business. So well done, good growth, and we're still going to work on the returns, of course. Our Belgium business, ahead of market, slight growth. Belgium business, Belgian market There's also the Spanish market, a little bit later. They are still a bit subdued. The lockdowns have an effect On sort of theme parks, that sort of thing, which would normally open this time of year, that's not the case. What we also saw very surprising is a strike day in Belgium. I don't really understand why we should be striking when we need to get out of an economic crisis, but that's A different topic. Very well performing professionals business again. OC also in Belgium did very well. So also a compliment For our Professional's part in Belgium. Italy, again, Italy 20% up, So they are also ahead of 2019. Italy is an excellent example of a still relatively immature staffing market there. European average is 2.3 percent. Italy is probably at 1.3%. So we do see structural growth opportunity given Still low penetration rate. We're also opening branches in Italy. If you look at our network in Italy, it's relatively Less dense compared to our other major markets. We get a lot of questions about branches. Well, if you penetrate a new region with a branch, of course, heavily digitized, Yes, you create new market opportunities. So very well done and a great EBITDA performance based on also productivity gains. As I said, Iberia, a little bit slower to recover. What we see here is an aspect you probably know, and that is based on the semiconductor shortage In automotive, productivity or production certainly in Spain is a bit subdued, but we think it's short lived. So there's still some promise in there of the growth also picking up in Spain. And as I said, well run company, so they Managed to keep their returns stable. Mixed picture in the other European countries, good growth in the UK And strongly increasing growth into the next quarter. And I want to single out Poland with 40.40%. And this is not a small business. We're market leader here. And the Polish business, yes, the bill rates are way lower than the rest of Europe, but this is a very sizable business where we have thousands of people that work. So very well done of our Polish Then the rest of the world, for me, this is a gift that keeps on giving, really firing on all cylinders. Japan, 4%, very strong performance, good profitability. LatAm, so I want to single out Brazil. Didn't talk too much about Brazil. But of course, in our portfolio, we have a few long term promises. India is, of course, a well known one of those. China is, But certainly Brazil, a subcontinent in Latin America under the leadership of Fabio Battaglia doing very well. I think we're currently looking for close to 100 people, new colleagues to fuel the growth in Brazil and get into a number one position. And Fabio has also said to me That's in staffing. And he also wants to go for the number one position in Professional. So good for you, Fabio and team, keep it up. In Argentina, where we have 20% market share now, so being leader with 20% market share, all organic, excellent And then look at profitability, right? So growth is 1, but this whole region comes in at above group profitability. So very happy with that performance. And then the Global Businesses, this is a business which is really our future. I talked a bit about Monster. So Monster is rolling out the new technology in 2 parts there. So first, there is the call it the seeker part, so the candidate part. That is almost now fully implemented in the markets where Monster is in. And we do see good Increased visits, but certainly apply starts. Apply starts are important because then people leave their resume and they become part of our database. As you know, we want to be built the biggest talent engine in the world. So Monster having accessible good technology will definitely help. We're now rolling out the company part, which has a lot of dynamic pricing and e commerce suite. That will probably go into Q3, but really setting up for success. Very happy with that. Took us some time, but Well done, Monster team. Keep at it. And what is important is all the technology delivered for Monster, the websites and what have you, is dedicated and developed for the rest of Randstad. Then Sourceright, very strong pipeline in RPO, which I think It's a good sign of things to come. And then our RISE Smart business was already very strong in the U. S. Last year. We now see a lot of growth in the European business. Increasingly, this is not so much purely about our placement, increasingly about what we call total talent management. A lot of talks with companies on what does your workforce look like in the future back to this reskilling agenda. So overall, lots going on In this business. And what does that mean for the numbers? Henley? Thanks, Chuck. Good morning, everybody. Yes, so the company delivered yet Another strong quarter. And most importantly, we turned back to growth and more and more businesses units are even exceeding 2019 top line numbers already. Our focus to deliver accelerated profitable growth, gave us another quarter of best in class returns. And even more importantly, it's putting us in a Fully utilized the benefit from an ongoing strong market recovery in 2021 and beyond. So we benefited from our diversified geographical footprint with excellent growth coming from the U. S. And Rest of the World and also our differentiated concepts such as in house and the deep market penetration sectors like logistics, e commerce, health care and government continued to perform well. Revenue growth in quarter 1 came in at 6.4% as the growth momentum continued to improve further throughout the quarter. The recovery of volume and revenue is broad based. All countries and all positive growth in March. And I'm especially pleased with the fact that we continue to achieve market Share gains in significant parts of our portfolio, whilst respecting the need to drive pricing discipline. Gross margin in the period came in Strongly up 30 basis points sequentially. However, still down 20 basis points year over year. I will go more into detail on the next page. With regards to OpEx, we delivered another quarter of balanced cost management with operational expenses being stable organically year over year. However, We also note a secret that we are pushing hard to invest into our growth capacity, well ahead of the recovery curve. And if anything, we would love those investments taking hold even faster than what we're currently experiencing. We continue to operate from a position of strength, and our recovery ratio Over the last four quarters, so 51% is well in control. As you would expect from us, we also accelerated investments into our digital journey And we'll stay the course going forward. EBITA came in at EUR 202,000,000 at a margin of 3.7 percent. Of Of course, a momentum improvement compared to last year, but maybe more telling not too far off from our 2019 level. On the next line, integration and one offs, we're €27,000,000 positive this quarter, and this includes the book profit of €35,000,000 related to the disposal of the minority stake in Aymouth Korea, partly offset by smaller restructurings in several countries. The underlying effective tax rate came in at 27.4% for the quarter. For full year, we expect an effective tax rate between 26% 28%. Let me now take you to the next page to talk about gross margin in a bit more detail. So here we go on Page 15, the gross margin bridge. So the first red bar shows the temp margin, which is stable year over year. The temp margin saw the annualization of COVID-nineteen related effects like idle time, but somewhat offset by some working day headwind. Most importantly, we can confirm a generally stable pricing climate across the board. In the bar in the middle, projects a 10 basis points negative mix effect triggered by a 5% decline of perm activities. That is a significant but expected improvement versus the permix effect we've seen in quarter 4, which was 30 basis points down. And lastly, HR Solutions represent a negative mix in overall gross margin of 10 basis points pretty much in line with Quarter 4. So whilst our gross margin path remains difficult to predict, we reiterate the importance to safeguard attractive gross margins in all our business activities, also achieved through smart, value based pricing, strategic mix management and winning mass Customized digital support. That gets me to the OpEx bridge on Page 16. Here we go. So with volumes and revenue getting closer to 2019 levels, it is important to understand how we see OpEx in the space of the recovery. Our OpEx management tries to secure the full and speedy recovery of our top line, the full utilization of further growth momentum in our markets and Uncompromised investments in our digital capabilities. In that context, we reported organic OpEx sequentially up EUR 12,000,000 and stable versus last In a bit more detail, this means that personnel expenses increased by 7% sequentially, which represents about 1,000 FT feet feet feet feet feet feet feet feet feet feet Es more on our payroll. Despite the drive for accelerated growth, we continue our tight field steering, which yielded a solid 10 percentage points improvement in our productivity, measured as gross profit per FTE on a year over year basis in quarter 1. Our cost optimization program is in full swing as we continue to identify productivity opportunities in order to create room for additional investments and to accelerate the growth and to continue transformation of our digital capabilities and automation. That productivity journey has become part of our DNA and will provide ongoing self help to secure sufficient fuel for growth and market leading profitability. Since we announced the journey back in November 2019, more than EUR 100,000,000 of structural cost reductions have already been identified across all cost categories, Utilizing the power of One Randstad now and also going forward. We continue to nurture climate of entrepreneurship within And with that in mind, Let's now move on to our cash flow and balance sheet on Page 17. So we generated free cash flow of $4,000,000 in the first quarter, up EUR 16,000,000 year over year and EBITDA did fund operating working capital, including the settlement Governmental release measures totaling €85,000,000 Very tight credit control and debt collection helped our DSO to improve year on year and through the entire COVID period. And CapEx in quarter 1 increased by CHF 19,000,000 reflecting our ongoing digital investments. It's now zoom in on our strength of our balance sheet on the right side of the chart. As per end of March, this year, we reported a net cash position of 3.80 €7,000,000 excluding lease liabilities with a leverage ratio of minus 0.5 per IFRS 16 And regular dividend of €1.62 per share and dividend on preference B and C shares is paid out on April 6, totaling 30 That already brings me to my last chart, the conclusion outlook, Page 17. As stated before, the pace of revenue recovery is sustained throughout the Q1 and is broad based across our portfolio. At the same time, visibility remains limited, especially with ongoing macroeconomic uncertainty due to COVID-nineteen pandemic. The development of volume in April is reaching 2019 level with continued improved momentum. The latest trends show that April activity momentum accelerate compared to the March exit rate, which was 14%. For quarter 2, gross margin is expected to be slightly higher sequentially due to seasonality. And OpEx, however, is expected to increase low to mid single digit percentage sequentially, driven by accelerated investments in growth, considering our expected growth momentum. As you know, we are aiming for an incremental conversion rate of 40% to 50% over time. However, For quarter 2 this year, we expect an incremental conversion rate of 50% to 60%. And lastly, let me mention that there will be a positive 0.6 working days impact Quarter 2. So that concludes our prepared remarks, and we are happy to take any questions. Back to you, Jess. Thank And the first question comes from the line of Paul Sullivan from Barclays. Please go ahead. Yes, good morning, everyone. Just a few for me. Firstly, just on gross margin, shouldn't we expect the balance in the second quarter to be slightly bigger than the Slight improvement that you're sort of alluding to. Maybe you could go through the moving parts there. Then secondly, On the ICR clearly outperforming in Q2, do you think we should The although we should expect some of that to reverse in the second half and your thoughts on investment into Higher growth as that continues through the second half of the year. And then just finally, your thoughts on sort of candidate wage inflation. And when does availability start to become problematic for you? Thank you. Yes. Let me take the first two. Hi, good morning, Paul. Yes, as far as GM gross margin is concerned, Look, there's not too much to add to what I've said. Of course, it's good to see that firm our firm business has got Good momentum. That's always helpful. Also 0.6 better days in quarter 2 is good. We definitely also start with variable based pricing, but don't underestimate the impact of mix. We have a very, very strong performing in our business, 13% this quarter, 8% last quarter that definitely also has an impact. So Unfortunately, I can't give you a bit more of a steer there. So as ICR is concerned, as you know, we really We've been quite vocal that we want to drive growth and want to really benefit From what we believe will be kind of a good year in there, but we stay very close on the ball. So Giving you any insights into H2 would even kind of be bigger than what we see. We really As Jack always said, we look in the next 6 weeks and really dialing up, up and down. At the moment, dialing up, but we stay close on it. Yes. And again, Paul, the speed of recovery also hinges around the speed of vaccination, which of course, Although we do support some of that, it's not our goal. So it remains to be seen. Canada scarcity, Yes. Well, again, the old teams are back, so people are tough to find. Specifically in the U. S, You got the COVID support, which is good for people. But at the same time, you need certainly a staffing, Quite an hourly rate for it to be attractive to work. So we do expect this to have an upward effect on wages, But a bit early to call. That's the U. S. Where this always reacts quicker. In Europe, this is very much also based on collective labor agreement what have you. So always the reflects there is later. So might be a theme this year, but certainly early days now. Great. Thank you very much. Your next question comes from the line of Oskar Vallmas from JPMorgan. Please go ahead. Good morning, everyone. Can you hear me? Yes. Okay, perfect. So two questions for me. The first one really on The Q1 impacts from either Transport and Logistics and then Vaccination. So the first one on Transport and Logistics, It was a strong Q4. Could you maybe comment on what you've seen in Q1? And what your thoughts are for the full year in terms of What do you think if there's any slowdown in logistics or e commerce transport volumes? And then also in terms of vaccination, you've Talked about it being a benefit for the group. How material is it? And is it material in any specific regions like Italy or the Netherlands? And then maybe the second topic on market share. You've talked about taking market share. Could you give kind of concrete examples of where that has happened And why you've taken market share? Has it been competitors not being able to compete in terms of digital products? Or are there any other reasons why you're taking market share? Yes. There are quite a few reasons why we take market share. The first one is, I think we called the return to growth rather quickly. So we started we announced this new waste program To aggressively invest in sales activities, we have digital support. So in that sense, back to your question, yes, We can point our people to where demand is, so that helps. We have a 2 weeks global call With all our management, how we're doing, we have a stack ranking on activities. We share best practices. So Yes. Although 2020 from a COVID point of view was, of course, not a great year, but we learned a lot as a company to beef up Our presence in the market and make it relevant from a content point of view also for our clients in this COVID time. So that has helped. Yes, and next to that, we have our in house business, In the Netherlands alone, I mentioned the U. S. Last year, so that has helped us a lot. The COVID related activity is material in the Netherlands, less material in other countries. But yes, This is, call it, communicating vessels. If COVID support goes down, the economy goes up. And again, Henry calls this fish where the fish are, So that's where a lot of fish is. So then we're there. And if we get the chance to support, we're going to do that. Yes, how that goes into next year. I think The beauty of this business is always, we don't know, so that keeps us on our toes and time will tell. But yes, we're optimistic based on what we see now. Yes. Maybe if I can chime in, Hi, Oscar. On transfer and distribution made up about 25% of our revenue in quarter 1 With definitely higher growth dynamics than the rest of the group. So let me stay there. Okay, that's perfect. Thank you. Your next question comes from the line of Anvesh Agrawal from Morgan Stanley. Please go ahead. Hi, good morning. I got two questions as well. So first, obviously, we've seen a very fast recovery and probably better than What we were expecting. But outside of the cyclical pickup, anything structural you have seen so far that sort of gives you confidence that Next cycle overall will be better than the last one. And therefore, you can grow at a higher rate for a longer period of time and not just the cyclical momentum you're seeing. And then second, looking at the guidance on the SG and A of low to mid single digit up. And if we think about Q3, Q4, and I know you don't give guidance, Assuming that the activity level sort of remain in line with 2019, do you then expect the SG and A to sort of stabilize sequentially or that will continue to inch up as we progress through the year? Yes. Anders, good morning. Yes. Structural, that's always the big question, right? So what do I see? The first one is, as after any crisis, The first demand will be filled by us. So the second demand might be perm, can also be filled by us. So again, back to former crisis, we have a way better presence in perm, in RPO, that sort of thing. Then I already called out markets like Italy, but also Spain, It's still very relatively low penetration rate. What's also interesting is legal systems. So we had a lot of populist stuff before COVID, but I think we've proven as a sector that We're very helpful to get people back into jobs, to reskill people. We think that will find its way into legal systems. And of course, we lobby a lot and we make proof points on the fact that everybody that lost their job is now back, That we can we change people from sector to sector. Nobody can do that. So certainly not public employment agencies. So that helps. Lastly, very interesting discussion is the gig economy, right, did not didn't exist in the last crisis. And you have the big debate 1st, the societal, but now fortunately also the legal one is that the platforms that put people to work as so called freelancers is really not what you should be doing. And companies like Jet, Just Eat, Takeaway are very vocal on the fact that they want people well secured on the bike and then we're there to help. So picking up aspects of this gig economy is again could be a structural driver. Please be aware that if 20% to 25 Percent of people work flexibly in the labor market. We are just 10% to 15% of that. So we think there's a lot of upside. Hi, Andreas. Yes, thanks for your question. Regarding SG and A, I can only reiterate what I just said. I mean, we've really tried to stay very, very close on the ball. And as I said in my remarks, We definitely want to support growth. We believe there's a lot of growth momentum. We are investing ahead of the curve. It takes a bit of time to get people on board and then making them as productive as possible. So it's actually a nice stance of seeing that we have enough capacity in the business to grow And ideally, grow competitively as we love to see it and then really making decisions more or less on a 2 weekly basis, honestly. Maybe it's also good to just reiterate, we've kicked off that Cost saving exercise, and that is still in full swing. So we just as a reminder, we are working on 8 categories. We have a team working on accommodation, on fleet, employee benefits and insurance, indirect procurement, IT costs, T and D, Marketing and Advertising and Field Productivity. And that is something where there's so much energy in there because we're turning Those productivity gains also back into growth. So, obviously, can't give you more feel for the second half, But definitely, 2021 for us is a year of growth. And that is always the best program also then for the on 5 through 30 to the next level. Maybe a final word on that because, of course, there's different ways of putting people in the business. So if we have an in house, we People in. We have the revenue already, and we put people in. These people are not so productive immediately, but it picks up very quickly. But then there's other businesses, right? So we also said we wanted to invest in perm really quickly, but it takes like at least 9 months to in perm to have people productive. We are investing in our IT business in the U. S, also in new regions. So that is that's more the long game, So to say. So when we try to also with these investments not just follow the growth but also create slightly different mix in our business, that comes with more cost, Lower productivity and we're quite bullish on doing that this year. So it's very much a moving target going forward. That's very clear. Maybe if I just ask a quick follow-up. On this cost saving, how much of that you are expecting to come through in 2021? Look, there is we've said we've already identified more than EUR 100,000,000 and but we are Taking the money invested back into growth and while securing really good market leading profitability. That's what we will continue to do. Yes. And again, this is not a stable thing, right? So when I'm going to fly, apparently, I'm going to fly cheaper than I did before because of the program, But I'm not flying. So it's not like 2019 and then so if we would do absolutely the same In 2021, as we would be doing in all the categories that Henley mentioned, we would do it at less cost, but we're doing less. So in that sense, it's not comparable. So don't Put in EUR 100,000,000 in your XL. Yes. Okay. That's very clear. Thank you so much. Before we go to the next question. And the next question comes from the line of Mark Zwartsenburg from ING. Please go ahead. Yes. Thank you. Good morning, everybody. First question is on the investments you currently put in. You mentioned you put in 100,000 extra FTEs. How much Extra growth. Can you with the current setting and the very good customers you have in the pipeline, how much can you handle compared to 2019? Can you with For example, with the current, days of people and sales force and branches already handle Quite some growth versus 2019. And that's my first question. And the other one is maybe you can help me a bit with the bridge. You mentioned, we are approaching in terms of volume levels 2019 levels. What should we take into account in making the bridge to the revenue line in terms of ForEx and maybe other elements that turn into that bridge? And with now volumes approaching 2019, looking to the second half, in 2019, second half growth It was negative at some point. Does that indicate that at some point without even a further acceleration of the market that you will see already growth in the second half of this year? Those will be my questions. Thank you. And that's growth compared to 2019 or? Yes, correct. Yes, 2020 is quite a bit, yes. So Mark, sometimes you get good news and it's tough to ask further questions. So you're asking great questions, but it's not even like we know and we're not going to tell you because it's different growth. It's a totally different business. So again, we're growing double digit in LatAm and Brazil and Argentina. So and that's different business. So we're investing in long term business in IT, in perm. So It's not if it was the same business, I could theoretically say with so many people we can do so much gross profit. But again, it's different business. So on the one hand, if we grow more in in house, yes, the productivity goes up, but that's not the only thing we want to do. So and then we have business which is better supported from a digital point of view. So in some aspects, we have a higher productivity than 2 years ago, roughly with the same client. So this is such a moving target. And it's not about the productivity of the growth, so This year, it's really about the growth, capturing as much as we can, of course, at decent returns. So I was sort of Yes. And this sounds funny, but we're amongst friends here, of course. I was a bit surprised on the productivity gains. So my first reaction was, okay, so we didn't put in people quick enough and enough. So We are not shooting for maximum ICR. That's not the theme now. So and then yes, we're going to have a growth year at a decent return. That is the theme. But you are positioning for further acceleration of growth in the second half. That's You are. How we should revisit? Yes. And that is an entrepreneurial I wouldn't say risk, but an entrepreneurial decision. So the worst that could happen to us is that the growth is speeding up, We're not ready to handle it. What could happen is, it's a little bit less growth than we expected. Well, then we have a little bit too heavy cost base. That's too bad, but that's a choice we're now making. Yes. And maybe then the bridge versus volume and revenue, things that are different For 2019? Yes, again. So it's too early to call. Again, the good news is the slide, I especially created this slide for you to show where we are and then the rest is talk to you again next quarter and the quarter after that. All right. Thank you very much. Your next question comes from the line of Konrad Zomer from ABN AMRO. Please go ahead. Hi, good morning everybody. Three questions please. The first one is on the development of operating working capital. You mentioned an €85,000,000 impact from postponed payments Because of the government relief measures, should we expect anything for the Q2 as well? My second question is on the organic growth Statements that you made. You talked about double digit growth exiting the quarter, but obviously that is supported by a lot easier comparables. So is the underlying organic growth slightly lower than in January February? Or Is that too negative? And my final question is on the leverage, 0.2 times, very healthy balance sheet. Shareholders still have one special dividend to come in September. But can you remind us again What your plans are on managing the balance sheet from a shareholder remuneration perspective, the leverage target of 1 Pre and post IFRS 16. Thank you. Yes, let me start with the first one. I can read operating working capital. Yes, indeed, we had in the Q1, we had a repayment of Social Security charges, which we benefited from extended payment days in a way. We also talked about that in quarter 4. We had expected that to be drawn in December, but it fell into early days of January. Going forward, there is there might be little stuff, but not really material. But since we go now into Sequential growth, of course, it will we will finance working capital. But as you also see now in quarter 1, we Take a very tight look on the DSO, credit management. And therefore, it's sort of I would expect the normal rhythm of the business kicking in again, higher growth, more EBITDA, A little bit liquidity to support the growth. Do you want to take the second one? Yes, I'll take the second one. Actually, it's the first comment. So our organic growth compared to last year is actually increasing. So that's why we take this to 2019 slide. So it's not just because of comps. We're beating the comps, if you will, from January into April. That's why you see the yellow line getting closer to 2019, Whereas, of course, the red line 2020 is totally off the charts. And that's also why for us, we're not looking at 2020 anymore. We're trying to, yes, in a way beat the comparisons and invest in growth. Yes. On the third one, Konrad, not real new news there. Just to reiterate, we made the decision to pay a special beginning of October of €1.62 per share. And we're now fully concentrating and delivering another strong year. And then we will make On capital allocation, but nothing to add at this stage. Okay. Thank you very much. The next question comes from the line of Hans Pluegos from Kepler Cheuvreux. Please go ahead. Yes, good morning, gentlemen and ladies. One question from my side sorry, 2 questions from my side. 1, Going back on the question of Mark, on the mix change with respect to compared to 2019, The bridge, I can imagine that especially, let's say, looking at which segments has been growing, especially like, for example, the Transport and Distribution, That likely the mix effect is a little bit negative compared to 2019. So is on average, let's say, your wage Per temp, clearly lower than we have seen in 2019 in your sales. So that way, there's slight negative mix impact on the comparison basis. Give maybe some flavor on that. And secondly, coming back on the U. S, you indicated some negative impact on the margin From some idle time, could you give maybe somewhat more feeling on how big the impact was? And so how we should, let's say, see the impact also In Q2, I would suspect to in the line trend there in the margin. Yes, Als, good morning. On the U. S, it's a little bit more than just idle time. It's also COVID pay, so you can bill that to a client, but without margin in certain states. And then there's SUEZ, state unemployment insurance that, of course, in many markets that has gone up. Many states are indebted, so that goes up. But as I said, negative in Jan Feb, I'm not going to give you the details, but March already has normalized a lot. And as And see in the result, it's pretty stable, but I just wanted to flag that. But you shouldn't expect too much in the rest of the year of that. Then Yes. The mix change, you're taking out one thing, which is the wage of the temp, but that's not really very relevant for us because the business that comes in might come in at Lower wages per temp or maybe even a lower margin, but it comes in at a higher conversion because we specifically do it through in house. So it is what it is compared to 2019. It's a different business. And once we've known the full 2021, we can tell you the difference. The important thing this morning is we're very close in absolute volumes, so to say, to 2019. And We think that's a theme. We'll get back to you on that one. And we're investing to get it as close as we can, but it's too early to say, like Mark asked, What it will be for the second half of the year because as always, it's the 6 weeks visibility. There are currently no questions in Good. I think that's it. Yes, there are no further questions in the queue. So I'll hand the call back to your host for any closing comments. Yes. Thank you very much. So, well, happy to share this news with you. I think it's not just good news about Randstad. I think it's good news for all of us. We are the bellwether of the economy. So we're very happy with the fact that we can be this canary in the coal mine with some good news. And thanks for attending and we hope to see you on the virtual roadshows in the coming weeks. Thank you. Thanks everybody. Thank you for joining today's call. You may now disconnect your lines.