Hello. Welcome to the Randstad Full Year 2018 results. Please note the call is being recorded. For the duration of the call, you will be on listen only. However, there will be opportunity to ask questions later in the call, and this can be done by pressing star one on your telephone keypad. If at any time you do require assistance, please press star zero. I would now like to hand you over to CEO Jacques van den Broek to begin today's conference call. Thank you.
Yes. Thank you, Kevin. Good morning, everybody. Thanks for calling in and listening in on this Q4 call and also 2018 call. I'm in a room with Henry and David, and Steven from Investor Relations. Before diving into the numbers, let me first inform you a bit about, at least for me, a very important event that took place in Q4, and that is that Linda Galipeau is leaving us. Linda started in our business in 1995 in the United States and was asked in 1997 to set up our Canadian business, which was nonexistent in those days. Today, our Canadian business is leading in Canada with more than EUR 400 million of revenue. She took on the responsibility for North America, and in those days, that business was absolutely not what it is today.
She leaves the U.S. in great shape, a clear number two in the market with a 5.6% EBITDA, and it is by far our biggest business. Next to that, Linda has been instrumental in our innovation and digital journey in the last few years, also taking care of our innovation fund. We owe Linda an enormous debt of gratitude. Linda, I know you're listening. I know you hate this, so I'll keep that brief. Anyway, thank you. Thank you very much. Because Linda informed me already a few months ago of her decision, we had time to look at her portfolio with respect to what we see in the market.
That has led to a decision to nominate Rebecca Henderson on a portfolio which comprises of enterprise clients, Randstad Sourceright, our big clients across the world, which increasingly want to be on what we call a total talent journey with us, and our global businesses, Monster and RiseSmart. All three are global businesses. That has a very specific rhythm to it, and that's why we created this portfolio. That means, and that I think is quite historic, that no longer we organize our company through geo, but we also become more client-centric where necessary. We see big opportunities there. That leaves the North American business. Although I mentioned that we are a clear number two here, we just have 3% market share in a huge market, in a profitable market. As you know, we have an 80/20 policy on recruiting and promoting from within.
Sometimes we deliberately deviate from this policy, as is in the case here, because we thought it was very important to. We're leading in digital transformation in our industry, so it's tough to learn from our peers, so we should learn from other industries. That's why we very deliberately wanted to hire from someone who made his or her career in a business that went through digital transformation. We're very happy that Karen Fichuk has decided to join us. Karen has made a career in Nielsen Media, which is a business that transformed fully into digital analytics and selling that and consulting clients on how to use data in improving their business models, which is absolutely also what we're doing at Randstad. Very happy that Karen joins us. Rebecca, of course, a rock star already for quite a few years in the client space.
We think we're well set up for the coming years here. Taking you to slide six. An exciting year. We've been in calls with you and also on road shows talking about the fact that as a company, we are a value play. Our share price goes up and down on economic sentiment, which is okay, but still, we made the point that we have a global business, we can manage our cost, we got good free cash flow, and we're very happy, first of all, with the fact that we've been able to improve our EBITDA as a percentage for the full year, but also very happy with our record dividend. Why is that? How did we change our business in the last years? As you know, last year, in 2017 actually, Southern Europe was really the growth play, sizable.
This year, in a way, the new kid on the block is Asia-Pacific and Latin America. They grew 12%, but they also improved their profit quite a lot. Very helpful. Also in country. In country, we now have very diversified portfolios. France and Germany have negative revenue in their staffing business, but they grow in professionals and perm, and that makes us more resilient. Then digital. On digital, while creating a good year with a record dividend, we also made quite some good steps in digital. Workforce scheduling, so where we have automated planning, where our temps get their own app to plan themselves, and the client has 24/7 access to how the planning in his factory or his warehouse or his company is going, is going very well. We're now in nine countries with the solution, and we have more than 1,000 implementations.
I'm going to talk a bit more when I talk specifically about France and the U.S., which are the front runners with this service. Data-driven sales, a tool that helps our consultants to be at the right moment at promising clients, and they get a daily input. A system that we tested in the last two years in the Netherlands, in the U.S., and France. We've now made a best-of-breed system that we call Signal, developed it in Belgium. We now have full usage in Belgium, and on the back of that, this system travels and we're going to bring it to other markets. Then finally, something which is now ready for global rollout, that's customer delight, a data-driven new way of measuring client and customer satisfaction and have direct feedback to our consultants. I'm going to talk a little bit more about that when I talk about Belgium.
All in all, very happy with the year. Slide seven, diving into the regions or individual markets. Our U.S. business, stable growth overall. U.S. staffing and in-house, 3%-5% growth. In this business, we have implemented 200 clients with workforce scheduling in our in-house practice. What does that mean? By creating more time and overview for our account specialists, they can spend more time on managing the pool, having contact with clients. We do see results as in better usage of the pool, less churn in the pool, which of course is crucial, if you see that unemployment is going to very low levels, and you got to make the most of the available talent. Our U.S. Pro business, 3% growth, quite stable in our technology business. F&A has been on a positive trajectory throughout the year.
Slight dip, we feel they're going to bounce back early this year. Very happy with our perm performance. 15% growth in this U.S. market, which of course, where perm is a large part of what we sell compared to 10% in Q3. As a result, 40 basis points up in EBITDA because tight field steering, some wage inflation. I remember last call, we had some talks on that. We think a 2%-3% wage inflation drives our growth there. A good start of 2019 in the U.S. France. The heading, mixed picture, that's very much how I feel. Growth is down 4%, you need to compare this to still a very strong Q4 last year, where we had 12% growth. You know that's quite consistent.
We've always had a strong focus on profitable growth, getting out of clients where we don't feel the price is justified. As you know, our French team has had a very steady performance over the year and has also been instrumental in our innovation and digital transformation. I'm absolutely convinced that they will bounce back as such and that they will weather this market situation. One example, getting back to workforce scheduling in France, 600 locations have been implemented, mostly at our current clients because this is a new service. Nobody offers this. We want to create a reference in the market for this new service. This year, we're going to go to prospects. We're very positive on that potential in the French market. Perm in France, very strong, 15% still on very tough comps also there.
Ausy, our acquisition from 2016, with double-digit growth, in the French market. Taking you to the next slide on the Netherlands. Closing the gap with market. We've had many questions like, "In your Dutch market, given your market share, given your discipline on pricing, can you still outperform the market?" We're happy to inform you that we are at market for Q4, above market in November and December. I think a great performance of our Dutch colleagues. Our professionals business, very strong at 13%, definitely above market. EBITDA is down 70 basis points, you might ask. This is in a large part due to a quite aggressive branding and marketing campaign, jointly developed with our Dutch and our Belgian colleagues. The theme is, what are you going to do tomorrow?
We firmly believe that a lot of discontent amongst people hitting the street, hinges on uncertainty. Uncertainty of their future in the labor market. We think there are answers. We think that Randstad can provide answers, and we invite people, if they're uncertain about their future, to come talk to us about what they can do in the labor market. That's why, "What are you going to do tomorrow?" is this invitation to candidates in the Dutch and the Belgian market. Last but not least, our pricing in the Netherlands is quite good. You know that we have a digital pricing tool developed in the Netherlands, and that absolutely has its effect in the Dutch pricing. The German market. Automotive weakness, we flagged it already in Q3. We saw it happening there.
I want to start with a big compliment for our German colleagues, because the minus seven is quite a bit above market. At the same time, they very timely took their measures. We took out cost in Q4, which will set us up good for 2019. The January growth in Germany is actually in line with Q4, it feels like we're not slipping further in this market, which by the way, is also true for the French business. The Belgian business. I could do two things. I could say steady performer and then go to Italy, I'm not going to do that, because then I would underestimate the performance of our Belgian colleagues. A consistent market outperformance doesn't come just out of nowhere. Here I want to flag what I mentioned, the Customer delight initiative. What does that mean?
Customer delight is a way of measuring constant 24/7, how do you call it? Satisfaction of customer and client. Customer here means also the customer, the client, but also means the candidate. What we do is we develop a set of criteria, a set of results, KPIs, and we ask our stakeholders, what do you appreciate most in our service? What would you like to see more of? What would you like to see less of? Maybe not a surprise is that the human contact, the human moments are crucial here. The Belgian team has designed this system two years ago, it gives direct feedback in a daily dashboard to our consultants on what they should do less, what they should do more to get more client and candidate satisfaction. The candidate satisfaction has gone up above eight.
For people who know these instruments, if you're above eight, this will lead to increasing returns and growth. We firmly believe that this is not only, but certainly in large part due to this way of managing our business, that's also why we're going to roll this out to other markets. It doesn't have a lot of IT complicated elements into it. It is ready for global rollout, we will do so. Going to Italy, talk about tough comps. Last year, this time, Q4 2017, Italy was growing 26%. That's the toughest comps we had in the group. There is some uncertainty in Italy, therefore, we see growth going down. Our Italian team manages this growth or this decline very well, as you can see in our results. Again, here, like in many countries, still very strong perm growth that helps.
Italy is now part of our little informal group at Randstad, which we call the 100 Million EBITDA Club. They improved their EBITDA margins markedly from 4.3 in 2013 to 6.1 in 2018. We, here in Amsterdam, of course, are quite confident that our Italian colleagues will agree that there's more to come. Lastly, very specifically for Italy, I want to talk about training. At our company, at Randstad globally, we train more than 350,000 people annually, but Italy is our world champion here, training last year, 40,000 employees working. Not just our own temps, but also at our clients. We do think this is an important thing going forward, where increasingly we see a mismatch in labor markets. Going to Iberia, strong operators here again. Spain, very disciplined on pricing.
If you see revenue down 3%, but EBITDA margin 50 basis points up, is again a good proof point that as an industry, we can improve our earnings even when the top line is not great. Rest of Europe, of course, a lot of countries. U.K., yeah, get the questions on Brexit. Again, we don't see it in our numbers. Our U.K. revenue is up, although our result isn't. We are embarking on a program in the U.K. to improve our conversion through digitization. We're quite confident that next year also our earnings in the U.K., although they will stay below group average, will improve. The Nordics, again, a good sign of managing OpEx when the top line is increasing less, protecting our profitability. Switzerland, very, very stable performer, above market growth and record profitability. Poland, large clients doing less, but our professionals business growing here.
Rest of the world, yeah, our highlight of the year, absolutely. Overall, 12% growth in the region, driven actually by all countries in this portfolio. Also Latin America, Argentina, Brazil, strong performances this year. It's a EUR 2 billion business annualized, so it really, really helps. Again, a good sign of the diversification we see at Randstad. Record results in Japan, in Australia, in Singapore, but also our Indian business did great this year. Overall, because many of these companies are perm is very important, a perm growth overall of 17% in the region. Very happy there. Moving to our global businesses. You may have read, we took an impairment charge on our Monster business, on which Henry will further elaborate. Nevertheless, Monster becomes more and more a part of our overall strategy, and that's progressing very well.
A large part of why we bought Monster is to be as the least dependent on external sourcing of candidates as necessary. We have, for example, our Japanese business, we need to rely on external job boards, and that's costly, and we want to own our own destiny. That's why we're so happy with all the profiles in Monster. What we now see is that more and more we do see these combinations. In the U.S., we use Monster Cloud Search, where the Monster database is directly coupled with Sourceright, with Randstad Sourceright. By the way, these two companies are really moving closely together, which is also a reason to put this in one portfolio under Rebecca, where we shoot orders from our clients directly into the Monster database, finding candidates we don't find in the Randstad database.
We do the same at Randstad Technologies, our IT business in the U.S., and we do the same at Yacht in the Netherlands. At the dashboard of a consultant at Yacht, he or she can look both in the Randstad database and the algorithms are directly translated to search into the Monster database. You've seen the growth at Yacht. We know that the Monster availability is definitely a part of that. We call those activities, and these are just a few examples, Monster for Randstad. The second level, we got Monster for Randstad, the third level is new business models. I hinted on that already in Q3, and now I'm very happy to tell you that we launched a new business model, A Better Thing, powered by Monster.
It's a business model in between what a job board can offer and what a perm company such as Randstad can offer. We launched it in four cities. It's aimed firstly at drivers. A driver and a candidate can make a full match on a mobile device. It is tech and touch, there's still people monitoring, chipping in wherever necessary. Most of it can be done online with a full check of all the necessary documents. We do this at roughly 60% of a normal perm fee. You probably remember that in 2017 at our Capital Markets Day, we talked about the fact that we want to disintermediate certainly the perm business, this is interesting. Just to give you a bit of a hint of the potential, Monster has more than 500,000 drivers in its U.S. database. First matches are being made.
If it works, rolling it out in the U.S. going to Europe, for drivers only, taking it to new profiles. Very exciting absolutely. Good year, different Randstad, digital success, digital progress, a record dividend. With that, Henry, can you shed some more light on the numbers, please?
Definitely. Thanks, Jacques. It's my pleasure to take you through the Q4 financials and my first full year results at Randstad. The fourth quarter can be summarized with strong profit and cash conversion of a competitive top line. This top line is coming through in terms of market share gains in many of our top markets, converting into attractive profitability and a record cash flow. Let me run you through the P&L in a bit more detail. I'm on page 13 now. We already talked about the strength of our portfolio. You've seen revenue in quarter four was stable year-over-year, however, perm and rest of the world grew double digits with excellent conversion. Also North America continued with solid growth. The next line in gross margin came in strongly at 19.8%, down just 30 basis points.
We will take you through it in more detail on the next slide, demonstrating that it's underlying stable. Operating margin, operating expenses are flat year-over-year, well monitored and under control, and we have been able to adjust the cost base quickly to changing market conditions and are still geared up to capture further growth opportunities. EBITDA came in at EUR 309 million with a 5.1% EBITDA margin, flat year-over-year, but please note against a very strong quarter four last year. As already mentioned, our incremental conversion rate for the last four quarters was about 56% and even higher in quarter four. We are especially happy about the agility of the cost base helping to build a strong track record of conversion.
Let me also point out that our reported net income and EPS were impacted by an impairment on Monster and some one-offs, including an exceptional tax benefit. Monster revenue has not yet recovered in line with our initial projections, which triggered a non-cash impairment of EUR 103 million. The tax benefit amounts to EUR 86 million and is related to a revaluation of so far unused net operating losses. Finally, one-offs were higher than last year, mainly related to OpEx alignments in Germany and in the Netherlands. Now, as promised on page 14, we show the gross margin in a bit more detail. Here we go on page 14. Let me unpack the gross margin for you. As stated, it's underlying stable, and you see the temp margin is significantly impacted by the abolishment of CICE in France in December.
It counts for more than half of the 40 basis points dilution. That's the red bar on the left. The bar in the middle shows the positive impact of our fast-growing perm business. 11% growth driving 20 basis points positive mix, fully compensating for the temp margin decline excluding CICE impact. It's all fee income and therefore gross margin accretive. Lastly, the red bar on the right represents HR services and Monster. As stated before, Monster is a 100% fee business, still in decline, and hence it shows up as a negative mix on the bridge. A pure technical effect. Also going forward, there will be quite some mix effects at play, and we always have an eye on gross profit in relation to OpEx to ensure enough benefit is showing up in EBITDA.
It is also reassuring that the underlying pricing environment is stable and even improving in some areas like in Japan and the Netherlands. We go to page 15, the OpEx bridge. Let me open that chart by stating that we brought our operational expenses in line with some new economic realities already mid last year, which helped us to secure some leverage in the bottom line. Excluding ForEx effects, sequentially, we reported OpEx down by EUR 1 million, which represents a 30 basis points as percentage of revenue improvement year-over-year for the quarter and 60 basis points improvement for the full year. We continue our work to flexibilize the cost base to stay resilient in the face of a volatile market and also improve our ability to steer our investments into places with the highest long-term return.
Finding the right balance between tough cost management and nurturing our growth engines worked out well in quarter four. We do our best to do the same for the new year. It's one of the keys to drive the business for leverage going forward. Let me close that chart with a confirmation that we are fully on track to deliver our cost saving targets of EUR 90 million-EUR 100 million annually by 2019. On page 16, let me shed some light what it all means for our cash flow and balance sheet. We reported in 2018, a free cash flow of EUR 627 million, which is an improvement of EUR 41 million in absolute terms and 7% up year-over-year. Main driver for the good cash flow was an improved EBITDA, helped by reduced working capital requirements due to lower sales growth.
It illustrates perfectly the countercyclical nature of working capital in our business, hence the resilience of our cash flow generation through economic cycles. Please note that in quarter four, we also received the CICE receivable related to 2014. The last bullet on the left shows day sales outstanding, which increased by 0.7 days on the 12-month moving average, mainly due to mix effects. Note, however, this was sequentially stable. On the right-hand chart, let's go straight into our strong balance sheet. We report an improved leverage ratio of 0.8 versus 0.9 last year, despite our record dividend payment of EUR 518 million over book year 2017. As a result, we propose a full-year dividend of EUR 3.38 per share or around EUR 620 million in absolute terms. This reflects a 22% increase year-over-year.
This consists of a regular dividend of EUR 2.27, based on a 50% payout of adjusted earnings, and a special dividend of EUR 1.11, fully in line with our capital allocation strategy. Our reported tax rate came in below our guidance of 23%-25% in 2018. As mentioned before, impacted by one-off tax benefits. The underlying P&L tax rate was around 23.5%. For 2019, we guide an effective tax rate of 26%-28%, mainly reflecting the change in the French subsidy system. Our cash tax rate guidance remains around 20%. Looking forward to 2019, we project to see a further improved free cash flow versus 2018. Let me go to my last chart on page 17. I'd like to summarize the key messages and provide you with an outlook for quarter one 2019.
Firstly, it's really good to see that our early intervention on the cost base has led to EBITDA margin and free cash flow progression for the full year. All in all, we are pleased to propose a new record high cash dividend of EUR 3.38 by share. This reflects our healthy balance sheet and confidence in future cash flow projections independent of macroeconomic scenarios. Secondly, our digital strategy is well underway and embedded through our business. It's not only helping to drive productivity, it also redefines our way we engage with customers and candidates, future-proofing our business. Thirdly, while market conditions are uncertain, Randstad is very well positioned to capture growth opportunities in the future. Our portfolio is much more diversified than 10 years ago.
Even more importantly, we are proud of having a highly engaged and motivated workforce ready to delight candidates and customers with innovative concepts and services. On the right side of the chart, I'd like to mention the fact that January grew at a similar pace as quarter four. Let me point out the gross margins for quarter one is expected to be modestly lower sequentially, reflecting seasonal trends. We also expect OpEx to be flat or slightly lower sequentially. Please note, quarter one has an adverse 0.8 impact on number of working days. With that, I conclude our prepared remarks and we'd like to take your questions. Kevin?
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad and please ensure your line remains unmuted locally. The first question comes from the line of Paul Sullivan from Barclays. Please go ahead.
Good morning, everybody. Excuse me. Just a couple from me. The restructuring that you took in Holland and the Netherlands, did that fully come through in the fourth quarter? What's your thoughts on further restructuring for 2019? More generally, how should we think about SG&A progression in those specific markets where you are seeing revenue decline? That's the first sort of bucket of questions. Then secondly, just on Monster. In light of the impairment, what's your expectation for revenue decline as we progress through this year and your thoughts on the sort of profitability profile at Monster now? Thank you.
Yeah. Hi, Paul. Good morning. Thanks for your questions. Let me try to answer those and I'm sure Jack will chip in. On the first one, actually, we are not seeing the full benefit of it yet, so we've taken the charge. As we've started re-restructuring in the second half of 2018, we will see some benefit of that rolling over in 2019. On OpEx, we're not guiding on OpEx. Actually, we're really managing the business on what we currently see. I think in 2018, demonstrated that we are really keen to show leverage in the business and protecting EBITDA margin and the same policy we will do going forward. As far as Monster is concerned, Paul, please understand we're not guiding on any other business. Also on Monster, there will be no guidance. I can just reiterate what Jack said. Monster makes Randstad stronger.
Jacques, I don't know whether you'd like to add anything?
No, absolutely. Henry and I were with the Monster team in Boston two weeks ago, and we came away impressed. This is a fighting unit, so that's good. We're very happy with our businesses coming together, as I mentioned earlier in my presentation. That was just a few countries where things are happening. It's happening in more countries where Monster has a sizable presence, and Randstad has a sizable presence. Absolutely, it takes more time, but that's not a problem, and we're all ready to go the extra mile here.
Should we expect more restructuring challenges this year below the line?
Yeah. We're not guiding on that one. I don't see any kind of unusual restructuring coming into 2019.
Because, Paul, this is the same as guidance. If we would expect restructurings, then we would guide for lower revenue. Currently we're quite flattish, which actually, given all the expectations out there, we think is good news.
Great. Thank you very much.
Thank you. Our next question comes from the line of Bilal Aziz from UBS. Please go ahead.
Good morning, everyone. Just two from my side, please. Firstly, on the, I suppose, underlying temp gross margin. You alluded to some positive pricing in Holland and perhaps in Japan. Can you perhaps also expand on some of the conversations you've had in France as well as the CICE rolls off and what are the clients saying there and your potential impact from there? Secondly, you previously broke out the sequential slowdown in Germany and France with respect to how much was impacted by the automotive markets. Any color there would be helpful and what you have seen year-to-date in those markets as well in the automotive sector. Thank you.
Okay. Thanks for the question, Bilal. In terms of the underlying temp margin, you've seen there is a multi-year pressure on temp margins, but we are doing the utmost we can to get more intelligence on pricing. We have pricing activities in many countries, and there's scarcity in the markets, and where we can, we try to price, and that is stemming some of that pressure we're seeing. In terms of CICE, I think CICE, the change in 2019, we believe is overall neutral for our EBITDA. We see probably some pressure quarter 1, 2, and 3 coming through because of the profit benefits, the profit sharing. In quarter 4, also because of better competitors, we see some of that equaling out. As far as automotive is concerned, there is, I would say, a stabilization we see. I wouldn't call it a bounce back, but it's stable.
The same numbers we've seen in quarter 3, more or less.
Thank you very much.
Thank you. Our next question comes from the line of Tom Sykes from Deutsche Bank. Please go ahead.
Morning, everybody. Would you be able to just run through the outlook for the perm business and just describe which parts of perm you've actually been seeing growth in? They seem to be a little bit more variable compared to your temp top line. Where have you had successes in perm? Is there a lot of RPO in that? What's your outlook for the perm business, please?
Hi, Tom. Good morning. We never do outlooks, let alone for perm, because as you know, this is the most variable part of the business. We have three pockets of perm. The first one is perm in staffing. Where we've taught our temp consultants to also sell perm. They sell it to a different person. You sell temp to HR, you sell perm to the one that hires. That has been very successful. That shows double-digit growth quite consistently for, I don't know, last four years or something. There's perm in the professionals businesses, also actually doing quite well. The 15%, for example, growth you're seeing in the U.S. is a mix of growing perm in our staffing business, but also growing perm in our F&A and IT business. The last one, that's what you mentioned, too, is RPO.
You see in our growth, in our Sourceright numbers, which is a mix of MSP and RPO, that you also see good growth here. It's across the board, which is good. I think that also is partly because it's such a proactive part of our strategy, supporting increasingly, for example, in France, our consultants with the right tools to be with the clients at the right moment in time, that helps your hit rate. At the same time, labor markets are getting scarce. Clients are also prone more to perm once they see a good candidate. Basically, we allow all our clients to choose between do you want them perm, do you want them temp, or do you want them on, how do you call it, secondment, which is not possible everywhere. Outlook is tough to give.
Okay. Just on France, in addition to the CICE comments, obviously some degree of renegotiation on unemployment insurance. Are there any parts of the proposals that you think would be negative to the staffing industry at all?
No. So far, so good. It's a different system. We now get, how do you call it, benefits directly, which actually Bodes well for the free cash flow this year, because it's sort of a double thing. We get CICE and we get the rebates. No, same discussion with clients always. Back to the pricing tool maybe. Increasingly we talk fact-based with clients on scarcity. What we really do in this pricing tool is we show the client what the labor market looks like, and it makes us a way more convincing negotiator with clients, and it helps pricing. At the end of the day, if the client doesn't want to pay, then we cease cooperating. Okay. Thank you.
Our next question comes from the line of Hans Pluijgers from Kepler Cheuvreux. Please go ahead.
Yes. Good morning, gentlemen. A few questions from my side. First of all, on segmentation, development in France and U.S. Could you give some feeling how you see, let's say, the trend by the key segments in those two markets? Secondly, also on trends, could you remind us what the trend was through Q1 2018? Did we see, let's say, a deceleration or an acceleration a little bit through the quarter? Could you give some feeling on that? On the restructuring cost, my last question, two things. First of all, looking at the impact for Q1, let's say, do you already expect some significant impact in Q1 of the restructuring? Secondly, are these restructuring or savings on top of the earlier announced, or is it part of that?
I assume it are on top of, you could give some feeling on the payback period of these savings, the restructuring cost, I mean. Lastly, looking at France, you already, let's say, given some guidance or indication on some savings in France restructuring. Looking at the current developments, do you not expect to see some additional savings or restructuring there?
Right. Thanks, Hans. Many questions. Good morning. Let me start with the segmentation one. I can give you a few pointers. In the U.S., for example, we saw transport and distribution coming down from 14% to 7%. In quarter four, we saw a bit of a slowdown there. Same in actually the Netherlands. Automotive, for example, came down from +4 to -2. In France, it's pretty much stable. A slight decline in manufacturing, but therefore automotive stabilized and same in Germany. It's more an industrial play. Manufacturing slightly weakened and automotive is more or less stable in there. In terms of restructuring costs, I don't think I should add an awful lot more than just saying that we're expecting for quarter one. That is how far we can see at this point in time. OpEx in line with quarter four, slightly below that.
As far as payback periods are concerned, yeah, we talk about something around one-time payback. It's relatively fast, but that also depends pretty much on countries therein. I'm not sure whether I've.
Yeah, one more thing to add there, Hans. I don't know where you picked up French restructuring. We're not going to restructure in France, because that's very complicated. Takes a lot of time. You'll be 9 months to a year ahead if you want to do that. We're not going to go to a social plan in France. The good news is also the fact that we don't see the revenue declining further. There's also no need to do that. We'll take out cost on a more organic basis. In France, it takes a little bit longer due to the legal setup of this country.
My last question was on the trend Q1 2018. Could you give some feeling how the trend was through Q1 last year?
Yeah. As far as quarter one is concerned, we're not guiding on the top line. We just.
No, this is for last year.
Yeah.
January, February, March. Pretty stable? Yeah, it's pretty stable throughout the quarter, Hans.
Okay, thanks.
Our next question comes from the line of Marc Zwartsenburg from ING. Please go ahead.
Yeah, I think I'm just waiting.
Yeah, good morning, gentlemen. First question, again on the restructuring charges, everything else in Germany. Can you give us a bit more color on the split between the two countries and how much is perhaps already rolled in and what we should expect in 2019? The second one is, we're looking now a bit at the flattish step top line, flattish gross margin trend going into 2019. How should we think about your conversion for an operational leverage for 2019? Last year, you gave some indications on what you expected in terms of operational margins and the EBITDA margin. Can you give a bit more color what the line of thinking is there if trends stay as they are? The second one is, you mentioned, Sjaak, the digital pricing tool in the Netherlands, and that that's really helping your pricing there.
Can you give us an indication what you think the impact has been on the pricing in the Netherlands in general, if you can. Also, will you roll this out, the copy-pasting model, throughout the group? Lastly, staying with the Netherlands, some talks on regulation there from a minister there. Quite crazy talks about more expensive flex pricing. Can you give us a bit your view on what you expect there in 2020? Thanks.
Yeah. I'll take the last two. The digital pricing, it's always tough to say it's precisely because of that. I think in our Yacht business, it's roughly 1%, but that doesn't mean that you can put in your model 1% everywhere we do this digital tooling, because of course, in blue collar, it's a different candidate market than in a professionals market. It does help put your people fact-based at the table. Rollout, we require a set of information. We need to have market information, market rate information. In countries where we currently don't have that, we are acquiring that information. I would expect us to roll it out to five, six markets into 2019 to start with. On the Netherlands legal system, my view, I've already been quite vocal in quite a few newspapers on this one.
I think it's an old-fashioned approach. It still takes the approach that there's two kinds of work, so to say, which is a fixed contract with an employer and a flexible contract in whatever shape or form. We think the market is moving towards work being the common denominator. When you work, you need to have a decent income, you need to be insured, you need to be able to get a mortgage, that sort of thing. If you lose your job, regardless of how long you've been working somewhere, you will have a, whatever, six months, similar to the Danish system period, where we're going to work very hard with you to get you a new job with training and all that sort of thing. We promote a quite massive change, which is not really what this law is all about.
This is sort of revamping the old way of looking at things. We've invited the government to come talk to us and to talk about the facts and our vision.
All right. Marc. Hi, good morning. Thanks for the questions. On your first one, restructuring. We spent about EUR 15 million in Germany and EUR 9 million in the Netherlands in Q4. As far as steering is concerned or operational leverage, actually, we generally expect an incremental conversion rate of 40%-50%. If things stay as they are, we definitely want to protect our EBITDA margins. That is probably all I can say at this point in time.
This restructuring in the Netherlands, because in the end, you're still growing, your margin is quite well. Is this then restructuring needed because you're rolling out your digital initiatives and can improve productivity? Is that what it is?
Right. It's a reshaping. It's not one project at one department, it's absolutely a reshaping of some business that we were not too happy with. It's in a way, I wouldn't say regardless of market growth, but it's not like in Germany, where it's a direct play, market goes down, and then you need to do, or you can do with less people. Netherlands is a more sophisticated business where we experiment more with digital offerings, and that's why we had to take out some people, unfortunately. It's not call it cycle-related.
Maybe if I can squeeze in a last one. If I look to the trend, you mentioned that the trend in Q4 +0.3 and stable now into January, February. You started off Q4 a little bit stronger, was more in line with Q3 at that time. Does it mean that the trend actually improved a bit in January, February versus December?
December is tough to call Marc, because we were quite surprised. There were working days, but these working days were, I think, on a Monday or something. You see a slightly negative working day effect. If you would look at volumes, then December is better than it looked like. That means it's pretty stable going from December in January.
Thanks very much.
Thank you. Our next question comes from the line of Anvesh Agrawal from Morgan Stanley. Please go ahead.
Done the impact from IFRS 16. Will that change the way you look at a special dividend policy?
Sorry, before you go on, we missed the first part of your question. Can you repeat, please?
Sorry, yeah. Can you just comment on the impact from the IFRS 16 and will that change the way you look at a special divvy policy? Second, last year, the Q1 gross margins were negatively impacted by the sickness-related issues. Do you see the reversal in Q1 this year? Should we expect some benefit? Thank you.
All right. Hi, Anvesh. Thanks for your questions. On the first one, in general, we will come back prior to quarter one results with a kind of in detail impact of IFRS 16 on our business, no, it will not have an impact on the dividend policy. As far as sickness-- Yeah.
Sickness is always tough because it's like an epidemic, and I run a staffing firm, so I cannot predict epidemics. In Germany, I mentioned it a few times, just to reiterate, there is this funny thing in Germany where in some situations it pays to be sick. You actually earn more to be sick than you would earn on your next assignment. We're working hard to get this out of the collective labor agreements in Germany going forward, but it's the wrong incentive. That means that relatively, our sickness is actually too high in Germany, and it's too early to call last year if we would have a flu epidemic or not. I wouldn't expect too much of a benefit because of this.
Okay. Thank you.
Our next question comes from the line of Andy Grobler from Credit Suisse. Please go ahead with your question.
Hi, good morning. Just a quick couple from me, if I may. You talked about the workforce scheduling and being in a 1,000 locations. Can you give some kind of scale around that? What does that mean in terms of revenues, and what is the opportunity over the next two to three years? Just in approximate terms. Secondly, just on Germany, looking at the total staffing employees, they were down 15%, but Randstad employees were up and number of locations were up. Can you just balance out the moving parts within those numbers, please?
Well, workforce scheduling, Andy, what we now see, because we've implemented it mostly. We actually have two versions, but it's the same solution. Workforce scheduling is in our in-house locations. We give the solution at the hand of our account specialists who then have more time and are more proactive in handling the pool. You do see some revenue improvement, but our market share is relatively high. What you do see is higher conversion and more client satisfaction. That's helpful. You have youplan. youplan is where the client plans. These are smaller clients where we give the tool, free of charge by the way, to the client or prospect. We equip all the temps with apps, and they can plan themselves. We've implemented it now at also quite a few of these smaller clients. Again, clients.
This year we're going to move into more the prospect base. It's very tough to really give you guidance on what this means. We're aiming to have another, I don't know, at least 1,000 locations into 2019. Yeah, we're selling to prospects. It's always very tough to program that one on how quickly that will go. We're quite confident that this will drive growth going forward. It's too early to tell the effect.
Andy, on your second question on employees working or FTEs actually. It's part of a legislation change, so well done to pick that up. I did the same. I called my colleague to say, "Hey, guys, I thought we did a restructuring. What's going on in the numbers?" It's actually not a like for like. Happy to go back to you with real underlying numbers.
Okay. Thank you very much.
Thank you. Our final question comes from the line of Konrad Zomer from ABN AMRO. Please go ahead.
Hi. Good morning. Thanks for taking my questions. My first question is on Monster. I know we're talking small numbers, but can you share with us exactly what the operating result was in the fourth quarter, please? My second question is on France. The performance of your Ausy business was very strong at more than 10% growth. Can you give us some tangible reasons why that business outperformed the market in such a great degree? My final question is on slide 17, where you give us the January trend for the various regions. You left five regions blank, and I was wondering if you could maybe give us an indication, with the same sort of dots, if that was like a decrease of low single digit or mid-single. Can you fill them in for us, please? Thank you.
Let me take the first one. Monster revenue was down 17%, but EBITDA actually was slightly positive in quarter four.
Yeah, the French question. What was it again, Konrad? Sorry.
The performance of Ausy was very strong at more than 10% growth.
First of all, we bought this company because we thought it was a strong company, and that shows. Secondly, we are, of course, combining client knowledge, client access, that sort of thing. Digital support, not yet. Actually, that will help. We've now moved the back office of Ausy to Randstad France, which is a very efficient and strong back office. We're going to equip Ausy also this year with some of the tools that our French consultants have. Actually quite bullish on this company going forward. Very happy with the performance. Yeah, it's a combination of a strong company. The combination of two strong companies, actually.
Last question regarding page 17, I think it is. It's actually the same trend as we saw in quarter four. We did the same actually in quarter three, the way we're presenting it. If you look at what we're reporting in quarter four, we see in January about the same trend.
Okay. That's clear. Thank you very much.
Thank you. We do have one more question that comes from the line of Bart Koopmans from KBC Securities. Please go ahead.
Hi. Good morning. Apparently my question didn't register properly before. Just one quick question about Monster. Indeed, we are to understand it's merely mostly a reflection of recent evolutions, recent past evolutions, compared to the initial projections. Or does it also include lower expectations going forward? Secondly, also a small question on working capital. You mentioned the countercyclical aspects of that part in your business. At the current growth levels, has that already fully come through yet, or do you expect some more to ship in, going forward?
Yeah. All right. No, thanks, Bart, for your questions. On Monster, actually, what we do is, not just for Monster, but for all our businesses, we do an annual impairment test. What you do there is you look at projections and, as far as Monster is concerned, we look at the projections made at the time of acquisition, and at this point in time, we need to kind of bring them down insofar that we had to take an impairment charge. Yes, it does include also a kind of a forward-looking element in it. As working capital is concerned, no, I don't think it has come fully through. I sincerely hope that we're going back into growth and then working capital is being relatively neutral in there.
Actually, the cool part of our business system is if we see quarters like we've seen in 2018, actually, it supports the cash flow generation and hence our record cash flow and dividends. In both ways, we're a real value play.
Okay. Thank you.
Thank you. There are no further questions, so I will hand back to our speakers for any concluding remarks, if I may.
Oh, well, concluding remarks. Yeah, again, as I mentioned, we're very happy with the year. I think it's good news that we see stable growth going into January. With that, we wish everybody a great day and hope to see you on roadshows or wherever we meet. Thank you.
Thanks for your question.
Thank you very much for joining this morning's Randstad conference call. You may now disconnect your lines.