Earnings Call: Q3 2017

Oct 24, 2017

Good morning, ladies and gentlemen, and welcome to the Randstad Third Quarter 2017 Results Call. My name is Seb, and I'll be the coordinator for your call today. I'm now handing you over to Robert Jan Van der Kraatz to begin. Thank you so much. Good morning, ladies and gentlemen. Welcome to the discussion on the Q3 results. I'm here with a few people, including Jacques van den Buch and Dafit Daejeur. I'm going to take you through a few slides to elaborate on a few things that we consider to be important to discuss with you, and then there is time for Q and A. In the meantime, I hope you will enjoy our new house style, which is part of our revised brand promise, You Move Forward. Moving to Slide 6 right away. Slide 6, the Q3 results, strong top line momentum continues. It's a continuation of the Q2 growth. Organic sales growth is stable, as I said, and it's driven by further momentum in Europe, which is mainly the result of 1% tougher comparables at the group level compared to Q2. Market share gains are coming through in France, Germany, Belgium, Italy, UK, Canada, Switzerland and Spain. So that is a clear result of the strategy paying off. The gross margin came in at 20.1%, which is 30 basis points sequentially lower, which is the effect of working days impact and the mix impact together, 30 basis points. Monster also had an impact here. And of course, the U. S. Hurricane, there was some impact as well. We believe that growth for the U. S. Would be adjusted from just a few basis points north of 0% to 1%. And finally, fast growth in in house is coming in nicely. It has an impact on the mix, on the gross margin, but it comes in with very good EBITA, as you know. OpEx decreased organically sequentially, and that is driven by the seasonality by foreign exchange and by Monster. EBITA growth nicely at 8% and ICR of 38%. And if one would adjust for working days, it will be slightly north of 40 If you look at the last four quarters, ICR is 34%. So for us, that's still a challenge to improve it further and which again goes back to the balancing act that I referred to in previous calls between, on the one hand, realizing a solid ICR and on the other hand, ensuring that we make the right investments in our digital strategy. And that challenge, that balancing act continues. EBITDA comes in at 4.9% compared to 5.1% last year Q3. And if you look at the underlying elements, it's working day impact here, 1 working day impact, and that equals 15 basis points. And it's the impact of Monster and Digital Investments, roughly 30 basis points. So if one would adjust for that, EBITDA would arrive close to 5.4 percent. And then finally, our perm also, good growth at 10% versus 7% in Q2, partly because of comparables. Just want to point out that France continues to grow at a pace of around 40%, which is mainly the result of applying big data technology. Slide 7. You see the regional split here with Europe leading the way. Europe stable at 11% compared to 11% in Q2. And North America, as I mentioned, 0, but including the hurricane, it would come in at 1% and also good growth in the rest of the world. Just wanted to point out that we have great performance in Randstad Sourceright, which grew significantly across the board, 12% in North America, 17% in Europe, overall 17%. North America then on Slide 8, stable top line. Revenue flat, but adjusted again 1%, perm up by 2%. We have, of course, the weather impact also at the EBITA level. We have a relatively large position in the Southeast, roughly 180 branches, but we did not adjust our cost base. So there is some EBITA impact included here in this result. Also wanted to point out the U. S. Professionals performance. It still is down, and we are really aiming at repairing that. But one signal coming through, IT, up from 2% growth, which we then indicated as coming around the corner, now 4% growth in IT. F and A is still a difficult market. In the Netherlands, on Slide 9, we have a continued focus on profitability. And you can see that in the last line on this slide, the EBITA margin improving. Customer profitability is the name of the game here. And we have skipped a few contracts, roughly EUR 100,000,000 recently of contracts because we feel they would come in with no contribution to the profitability of the company. So EBITA margin up by 30 basis points despite one working day less. If we look at Professionals, we see it continuing at its successful track record with a further increased EBITA margin. But also, we see the pricing tool in this segment, again, digital, paying off nicely. And also in Tempo team, we see our Tech and Touch approach working nicely. We'll talk about this more at the Capital Markets Day. Overall pricing pressure in the Netherlands is easing and probably also some scarcity in the market supports this. In France, we are very proud of the performance in France, 14% growth again, ahead of the market clearly, but also, as I said, continued strong growth in the perm business continues around 40%. Our EBITA margin improved by 10 basis points, which is the result of some incidentals in last year, but also ongoing investments in further growth in the French market. We still see some pricing impact as previously, but overall, I would say that, that is at a stable level. We also see France growing here in the Q3 compared to Q2 now at 8%. Our CICE, we see some progress on the Q3 on the 2013 receivable of EUR 70,000,000. That's a bit of an unclear process. We now expect it to come in, in Q4. We are discussing changes in CICE. It's too early at this point in time to comment on this, but we hope to assess this further and discuss that with you at our Capital Markets Day. Germany, on Slide 11, accelerating to double digit growth from 9% in Q2 towards 10% percent in Q3. Very nice to see our SME business outpacing our growth to large clients, but also perm is doing nicely. And the margin is up, the EBITDA margin is up despite fewer working days, which has more impact in Germany given its structure. Moving to Belgium then. Again, this was this is a very nice story, and it continues also into Q3. It looks like slightly lower growth, but that is fully explained by the comparables that have become tougher for this quarter. Growth remains ahead of the market. And actually, that was our promise that we made a while ago that we should come back, beat the market, and we are happy to see the delivery of that ambition. Iberia, which is Spain and Portugal, also here, robust momentum continues. We have staffing up clearly, but also perm business continues to grow nicely now at a pace of 23%. The EBITA margin improved to an impressive 5.6% with a very significant ICR, so serious productivity gains, of 87%. Italy, continued high revenue growth, quite a success story here. I mean, this is where we started organically. We're now a company heading for a level of €1,400,000,000 1,500,000,000 on an annual basis. Revenues up by 27% whilst just having integrated a company. In house remains the strong growth driver here, which has some impact on the gross margin, as I referred to before, and also on DSO. But at the bottom line, it is really very helpful. In our other European countries on Slide 15, you see a selection here. Overall revenue growth is now 13%, improved from a level of 11%. Our EBITA margin is down slightly, which is the result of some incidentals in the Nordics and also of lower perm growth in this segment, but overall solid revenue growth. In the Rest of the World, growth at 10%, double digit continues. In Japan, growth is stable, but the acquisition shows very impressive growth, 19%. And we also have nice growth in Australia at 9% China, 2018 Latin America, 2019 and an EBITA margin improvement to 3.3. On Slide 17, an update on our M and A business. We expect, by the way, the next quarters to have very limited EV very limited M and A due to our focus on EVA. And also, strategically, there is no immediate need to address those points. So we are currently not working on anything significant other than to make sure that we create value out of the acquisitions? Well, you see them listed here. On top, RySmart now integrated. Profis on track. This is the Nordics acquisition where we have finalized our integration completely. Obiotifelavoro is ahead. We expect EVA positive territory not in 3 years, which is our ambition, but also already in 2 years. Carrillo, the same, 19% growth. It's unavoidable. It's going to arrive at EVA positive territory in 2 years. Monster, our revenue decline is more or less in line with Q2. The loss as well, we have gone through the next level of restructuring. We started at the top, new team in place, and now we are on our way through the company. Restructuring charges included, CHF 21,000,000 We expect more in the next two quarters, some €12,000,000 Payback period will be around 6 to 12 months. Part of that will be reinvested in the business, and we'll discuss this further, all the changes we are going through at Monster at the Capital Markets Day. But I think important to finalize with here is to point out that we are underway according to our plan. And then we have OC, that's very early stages, in line with expectations. Moving on to the financial results on Slide 19, our P and L. Just wanted to additionally point out that the reported EBITA includes a negative impact from foreign exchange, which is U. S. Dollar versus euro of 6,000,000 euros Furthermore, net finance costs are slightly higher. That's not because of interest charges, but that is because of a foreign exchange impact, which is bookkeeping only. Tax. The ETR, the effective tax rate, remains in the range of 24% to 27%, whereas the cash tax rate is around 20%. Looking at our performance by revenue category. Solid growth in our staffing business, EBITA margin at 5.6% now and on a 9 months basis, 4.9% nicely. In house, also moving very nicely, 5.3% in the quarter, mainly driven by Italy and France. In Professionals, we see a small tick, a lower EBITDA margin, which relates to our U. S. Professional business, which is growing in the IT space, but that requires some investments in that growth. Our Global Businesses, the results are fully explained by the inclusion here of Monster, which was not there last in Q3 last year. The bridge on gross margin. Slide 21. This connects Q3 last year with Q3 2017. And if you look at the components, first one is the temp margin fully impacted by working days effect 15 basis points and mix mainly being Randstad in house services 20 basis points. So pricing is more or less stable. Perm placements, very minor impact. And Human Resource Solutions, and the other segment includes Monster. So Monster is the gross margin business. Then operating expense is a different comparison. Here, we compare sequentially from Q2 to Q3. Here, you see the part of the foreign exchange, which results in a EUR 6,000,000 negative at the EBITDA level. Furthermore, I would say relatively stable growth of our organic OpEx, 5% in Q2 but also 5% in Q3, and our main focus is on an ICR here. Then we have net debt at a leverage ratio of 1.4. DSO is up slightly 1.4 days, and that is due to the inclusion of acquisitions in our book, but also the adverse mix effects here. If you have high growth in Italy, in France and in Spain, that typically has an impact at the group DSO level. Also, the end of the month closed in a quarter, which typically does not have a positive effect either. And we have a minor negative effect remaining, which we are currently addressing because for us, this is a key indicator. Free cash flow at Randstad, slightly down due to, again, the investments in growth through working capital for the accelerating top line, mainly again Italy, Spain and France our DSO, as I just discussed in our investments in Monster some payments, some timing of tax payments throughout the company. Furthermore, nothing special. Our capital expenditures are showing some synergies as well. You might remember that last year, Randstad came in at 80, Munster was 20, adding up to 120. We're now clearly approaching a level below that. And as I pointed out, CICE is expected to be included in Q4. And then finally, our outlook on Slide 25. So in September, the exit rates but also the volumes of early October, broadly indicate a continuation of the Q3 trend. The gross margin is expected to be stable sequentially. Please keep in mind here the next point, which is a 0.5 percent sorry, an adverse 0.5 percent working day impact in Q4. Also, the planning of Christmas, which effect really is not something we can plan ourselves, but it's a bit unfavorable because it's working days, so we'll see what comes out of that. Our operating expenses are expected to be broadly stable sequentially, which means that we have some Monster savings but some increases that are being offset by that. Our comparables are a bit tougher in Q4. And as I said, M and A activity will be limited in the coming quarters. And we're happy to discuss further details, especially on our digital strategy, on our tech and touch strategy and the impact of that on our results, mainly thinking about growth opportunities. We'll discuss those with you on November 21. In London, hope to see you there. So now it's time for Q and A. Please, operator, go ahead. Of course. And the first question today comes from Robert Plant from JPMorgan. Robert, please go ahead. Morning, everyone. In terms of the Netherlands, where you've shared low margin contracts, did any of the customers decide to stay with you when you adjusted pricing? And to what type of competitors do you think those contracts went that you chose not to keep? Thank you. Good morning. Jacques here. Of course, when we share a contract, these clients have not decided to stay with us. There are underlying, of course, quite some clients who do want to stay with us. We do see some early signs of clients who went away, but because of pricing is that they are slowly coming back. I think this is early days. We're not getting our hopes up. But certainly, we're happy with our consistency here, which in the Dutch market is, well, a little over a year that we're doing this. So yes. And where we want to grow, as Albert Jan mentioned, where we want to grow, we are growing, so very happy with that. Thank you very much. Yes, we see it moving to various competitors. Okay. Thanks for that. The next question comes from Hans Ploegers from Kepler Cheuvreux. Hans, please go ahead. Yes. Good morning, gentlemen. Going back on the Netherlands, You indicated pricing and principal is starting to stabilize, but at the same time also at the beginning of the year and indicated that you expect, let's say, to talk about growing more in line with the market through the year, but that's not happening. So could you a little bit, let's say, explain what's happening? Have you become, let's say, more fierce on contracts? So are you, let's say, playing the game to get, let's say, in the longer term, the price is up a little bit? So benefiting, let's say, from less price pressure, maybe even some shortage in some segments? Then on U. S. Professional, let's say, a discussion we had for some quarters now that you want to improve there the performance still not happening. But what's your feeling? How you could compare to market? Is it not something really more the market? Or is it really something internally? And could you give some more detail on what you're precisely in doing? And when do you expect, I'd say, that those benefits are coming through? Yes. Let me start with U. S. Proffs. Actually, it's a mixed picture. We're very happy with our technology, so our IT business. This is the biggest business, EUR 1,000,000,000 with a 4% growth, they are at market. So that's quite a turn, and we're happy with that one. And then there's the white collar F and A business, and that's not yet there. Similar strategy as we applied in Technology. We changed management and also beefed up the way we steer the business. That takes some time. So that's the last remaining weak spot in our Professionals portfolio. And again, in London, Linda will give you a bit more elaboration on how we're treating this and what we're doing to also turn the corner in our F and A business. Back to the Netherlands. It's always tough to say what happens if you Robert Jan alluded to the EUR 100,000,000. This is not many clients. It's just 2 or 3 big clients, but at the end of the day, you say goodbye to them because they don't want to play the game on pricing. Definitely, for us, a long term play here, we are the market leader, and we want to stay ahead of margin development here and give a good example. And you can see that in our results. We said that we would very much focus on results, which we're doing. Yes, time will tell. As I mentioned, there are some clients who do see multiple benefits of changing. And when they don't get the right people, they might come back. But we'll keep you posted on that one. Yes. And Hans, keep in mind that these are not just low EBITA margin contracts. These are no EBITA margin contracts. Okay. Maybe one follow-up on that. Let's say, you're one of the main competitors, which was one of the key drivers of price fight, your friends in Almir, how they are behaving? Because I understand there's quite some restructuring there going on. How do you see them behaving in the market? Yes. They've turned the corner here. They've seen the light, but there's other competitors. Okay. Thanks. The next question comes from Sasini Varanasi from Goldman Sachs. Sasini, please go ahead. Hi, good morning. Thanks for taking my question. Just one please. I realize that you've made a lot of investments and Monster has been a drag on the margins this quarter. I was just wondering to get your views on when margins will start showing improvement given the top line growth trend you're seeing? Thank you. [SPEAKER JACQUES VAN DEN BROEK:] Yes. The margin improvements, that's a fair question, and that's exactly the center question that we're going to address at our Capital Markets Day in November. So I'd like to come back to that more extensively in November. Thank you. Then maybe, Jake, can I ask if Q3 is probably the trough? Can you repeat your question? Q3 is a tough. Q3, yes, we expect an improvement of the result of Monster in Q4. So it should get better in Q4. That's the expectation we have for Monster. And we'll also elaborate also elaborate on further developments at Monster at the Capital Markets Day. We will do that extensively. And so I don't know if you mentioned that already, but Chris Caiberian, our CEO handling Monster is going to be on stage also. So it's from the horse's mouth. Perfect. Good quarter that day. Thank you. The next question comes from Tom Sykes from Deutsche Bank. Tom, please go ahead. Yes, morning everybody. Excuse my sore throat. But just on a slight follow-up on the last question, which hopefully can give a bit more detail, just what's been holding back the leverage in France. Obviously, you're saying in house is very strong, and that should be margin accretive and your perm is very strong. So maybe if you could just give a few more details on that. And then would you expect, if you do not have a hurricane effect again, do you expect some improvement in the U. S. Margin? I just noticed, I think the number of outlets you have in the U. S. Is actually edging up slightly. Is that a sign that you think the U. S. Market is getting stronger, please? Frans, Tom. That as I think I referred to it, the comparison with last year was a bit challenging because we had some incidentals included in last year. But the second point is and also that will be elaborated upon at the Capital Markets Day that France is leading in organic digital developments, which are already coming through, for example, in the perm growth of around 40% in France. But that, of course, requires investments. And that's the other explanation for the lower leverage in France. And then your question on the U. S, Which Yes. Well, there was a hurricane effect. So that will ease out, but we're currently not seeing a strengthening of the U. S. Market, not a deterioration either. So again, a pretty flat picture. Okay. And is and a follow-up on your digital comment. Are you able to say how much of the 50 basis points drag you saw was digital investment? And what countries that you alluded to France, was that particularly in, say, France and the U. S. I don't know. Yes. Well, it's the total investment, the biggest part is Monster, and the other part mostly relates to France. But again, that is also something we have on our agenda at the Capital Markets Day to not only show you the cost side but especially the opportunity side. Okay. All right. Thank you. Thank you. The next question comes from Kean Marden from Jefferies. Kean, please go ahead. Morning, gentlemen. I have 2, if I may. First of all, on Monster, I'm wondering if you could share with us please the reorganization costs that you've taken to date relating to that business. And also just give us an indication when you're assessing value creation from that transaction. Do you add the reorganization costs in to the proceeds that you paid for the business in the first place? And then secondly, on France, I wonder if you can give us a breakdown, please, of your temps. So the percentage of temps that you have there that fall within the 1.0 to 1.6 times SMIC range and the proportion that fall between 1.6 and 2.5? Thanks. [SPEAKER JACQUES VAN DEN BROEK:] The answer to your second question is no. I don't know by heart. And then your question on Monster. So as I said, we'll have a charge of €21,000,000 this quarter. We expect more in the next two quarters, probably some €12,000,000 And this relates to restructuring in terms of people, but also we have some significant lease contracts where we have provided for because we will not use that space anymore. So all of this is included. The payback term in the U. S. Typically also is between 6 12 months. And as I said, most of quite a significant part of this will be reinvested in the business again, but also part of it will come through at the bottom line. And we'd like to discuss those details with you in the context of our overall plan that will be presented by our leader of our digital business in the U. S. On the Capital Markets Day. Okay. Maybe one small follow-up on France. Your question about the wages is probably related to, well, let's say, a message that there might be a change in CICE with more subsidies at the low end and slightly lower. We don't see that yet. We've not seen that as a fact. So in that sense, we're also not analyzing our sales mix or our wage mix because today is not relevant in that sense. 2nd one is on just one small thing on Monster. Today, all Randstad consultants in Europe and also in U. S. Are using all Monster products in their day to day business. So we are creating value in Randstad already because of Monster. So that's, I think, an important one to mention here. Okay. And sorry, I'm thinking if I'm not fully understanding the answer. So just to check, do you when you're calculating EVA, do you add in restructuring costs? I think you talked about payback. My question was more on the EVA calculation. So does EVA for you, does the cost of the assets basically be the sum of the restructuring plus what you paid in initially? I think the answer is probably best, just to check. Yes, Tom. We're trying to do this correctly, so you're right. Yes, integration costs, restructuring costs are included in our calculations. Very good. Thank you very much gentlemen. Thomas, I'm just adding here. So we have an ambition to sorry, King, we have an ambition to include the to be at EVA positive in 3 years, which we are well on our way for most of our acquisitions. We outlined that Monster is more of a strategic acquisition that makes it more challenging, and that's the discussion we'll have at the Capital Markets Day. Yes. Yes. Thank you again. Thank you. The next question comes from Mark Swartenberg from ING Investments. Mark, please go ahead. Yes. Good morning. My first question on tax rates. Robert Jan, can you help me a bit with the potential impact of the lowering of the U. S. Corporate tax rate? And also the same for potentially for the Netherlands in terms of first for your P and L guidance and the impact on your cash pooling, etcetera, but also perhaps for the U. S. Specifically, the impact on tax loss carry forwards, particularly geared to the Monster acquisition? Yes. Marc, as always, you're a bit ahead of the troops. And we have to assess this. I mean, and the plans in the U. S, we, of course, are closely monitoring those. One way or another. There will be a reduction, but there will also be an increase in other spaces. So it's too early for us to share that with you. We'll do it at the earliest possible momentum. But and also in the Netherlands, it's clear there will be a reduction of the tax rate. But at the same time, it has also been announced that it will be repaired one way or the other. So we need to assess that more in detail. So I will share it with you as soon as we have a full picture, sorry. Maybe one follow-up. For the Nellis, if there's no compensating stuff that will affect you, would it still be a positive for you given the tax planning you have or not? [SPEAKER JACQUES VAN DEN BROEK:] Certainly, will it be positive. Thank you. Okay. And then my second question on regulation. Can you perhaps give me a bit of an update on the latest regulatory news in the Netherlands? And the same for France, what the latest status is in terms of direction from government talking about further deregulation or changing of flexibility in the Netherlands and France. So anything to add there? Yes. Well, in the Netherlands, we don't expect a lot of effect on our business. So first of all, there's this change that you can only but that you now again can give 3 contracts for a limited duration that goes a bit up and down. So we'll wait and see. Then there's some text on payrolling. This is mostly because in this sector, there's a lot of issues. So we're very happy when the government treats issues. But again, we don't expect a lot of effect here. On France, there's no new formal legislation. So in that sense, we're not seeing anything. What we do like in France is the overall optimistic sentiment in the country. And apparently, it looks like the fact that the regulation is now coming through without the Street opposing this massively. So that's good and necessary. Marc, and I have some follow-up comments on tax. Please remember that even in difficult years, the company continues to be profitable, which means that any reduction of the corporate income tax rate should be, in the long economic impact of the sort of lower charges against future profits will also always be more favorable because we'll have future profits. Even in 2,009, the company remained profitable. So keep that in mind. I don't know the number, but I know it's a plus. Okay. Yes. That's very helpful. Thank you very much. All right. The next question comes from George Gregory from Exane. George, please go ahead. Good morning. 2, please. Firstly, just on the tougher comparatives. You helpfully called out 2.4%. How does that phase October through December, please, just so we get a sense of how that plays through? And secondly, on CICE in France, obviously, the reduction coming through in 2018, just any thoughts as to how we should think about that dropping through the P and L and the extent to which you think you might be able to offset some of that? Yes. As always, with the CICE and the reduction, we'll try to negotiate with clients as tough as we can and try limit the negative effect here. You also see in France that the labor market is tightening its early days, but certainly in many its early days, but certainly in many segments, it's increasingly tough to find people. So hopefully, we got a good negotiation situation with clients. But you know our stance here. We think the money is ours, so that's how we start these negotiations. And if clients don't want to play ball and the margin, like in the Netherlands, drops below a certain level, then we'll say goodbye to clients because we didn't emphasize France yet. But in France, we're still saying goodbye to clients also. So in that sense, Robert John's comment that we are above market, including all this, is quite impressive. And on the tougher comps for last year's Q4, the toughness increases through the quarter because December last year, as I referred to before, Christmas was partly, I think, in the weekend, but certainly at least one day, but maybe 2. I don't remember exactly. But in our numbers, we can see that December was the strongest month of the quarter. And this quarter, it will be more challenging. So we'll see what comes out of that. Okay. Thank you. The next question comes from Konrad Zomer from ABN AMRO. Konrad, please go ahead. Hi. Good morning, gentlemen. My first question is on Monster. You mentioned the €12,000,000 restructuring charges that you might see coming. Is that per quarter? Or is that a one off on top of the 21,000,000 you mentioned today? My second question is on CICE. Can you explain in a little bit more detail why you didn't get the €70,000,000 payment in Q3 and now expect it to happen in Q4? Is that the first of many delays? Or is this just a one off that they explained to you in detail? Thank you. Yes. On Monster, the €12,000,000 that's the additional restructuring cost that will come in, in Q4 and Q1. So it will be divided over those two quarters, and we'll have to see what will be the precise number. And on CICE, this is a new process, and we can see now that the French government has been handling the smaller amounts already. And we have information now that the bigger amounts are close to being finalized. So this is a learning process. We have analyzed in the past if selling those receivables would make sense, but economically at Randstad, that would bring a significant cost as a result of which we have decided not to do that. And we will sort of analyze the process when having received the monies in terms of the impact going forward. But at this point, we expect it to come in, in Q4. Okay. Just a quick follow-up on a different subject. It's North America Professionals. You've put new management in. You've been looking at it for quite a few quarters. When do you think we can see the improvement coming through in terms of revenue growth? Yes. You're talking about F and A, Konrad? Well, more in general. We know that IT was up 4%, but the minus 2% that your professionals revenues generated in Q2. When do you say that? Because of F and A. So 2 to 3 quarters before we see improvement. Okay. Thank you very much. The next question comes from Anvesh Agarwal from Morgan Stanley. Anvesh, please go ahead. Hello, Anves, your line is now open. Hello, can you hear me? Yes. Okay. Sorry. I have few. The first is on France. Can you talk about the big data technology that you're using there? What exactly you're doing with it? And the second, just a clarification on your outlook statement. When you say October volume broadly indicate continuation of the Q3 trend, what does broadly mean? Is it fair to assume it's slightly below given where the comps are? And 3rd, on the free cash flow, it's been going down y o y for last few quarters. Now I appreciate there's an impact from working capital and digital investments, but when should we expect it to turn around? Thank you. Yes. I'll deal with your second and third question first. The outlook October, what we measure is every week's volumes of number of people that we place. And on the back of that volume trend, we come to the conclusion that we think it's broadly in line with what we have seen in the quarter. So that's why we are using that word. We don't have the precise revenue numbers, but there's no reason to believe it will be below or north of it. It's more or less broadly in line, and we'll have to see what comes out of that. We still have to complete the month of October. And then we have the free cash flow. You're pointing that out, and that is a priority for us, as I mentioned. This year also includes significant outflow because of Monster. It's the EBITA results and on top of that, the CapEx. So we'll discuss with you how we see that improving going forward. The CICE receipts will increase in the future from the expected EUR 70,000,000 now to EUR 100,000,000 going forward. And as I mentioned, we are tightening up again our processes on the receivables management. And the discussion on customer profitability is not only about price, it is also on payment terms. So that is something where some of our clients that feel they are very sustainable in their business still are asking or challenging us for payment terms of 120 days, which is a very nasty business because we are incapable of delaying payments to our flex workers. So that is a priority, and I think all of that should result in improved free cash flows going forward. And of course, we're very happy with the fact that we're financing growth. Of course, You've seen a peer, we grow twice as fast. So we need to finance that. We're very happy with that problem. On France, so we're going to have leaders of our businesses on stage at the Capital Markets Day because we firmly believe digital is not about a tool or buying a tool. It's really about a changed way of working. So we'll have a French leader and a Dutch leader on stage to tell you all about how technology fuels our business growth and how our consultants use that. So happy to talk about that more elaborately. I don't think a call like this really does it justice. Okay. Just a follow-up on the free cash flow. You said there are some CapEx related to the Monster. But earlier in the call, you also flagged that you are now achieving some sort of synergies. So what's the level of CapEx you're still making for Monster? Well, when we acquired Monster, it came in with roughly EUR 40,000,000 and now it's quite a bit below that. Let me stick to that number. Okay. Thank you. You're welcome. We have a follow-up question from Hans Ploegers from Kepler Cheuvreux. Hans, please go ahead. Yes. Small question on the ICR. You indicated underlying it is over 40% adjusted for the working days. But is that, let's say, at operational leverage level? Or is it also including your investments in digital? Because if I take those into consideration, I don't come to the over 40%. Yes, yes. So it's including our operational expenses, all our operational expenses, which includes the organic digital developments in the company, the organic digital investments. So for example, what we just referred to, the big data in France, it's all absorbed through regular OpEx. Okay. Thanks. All right. Operator? We do have one further question just come up from Matthew Lloyd of HSBC. Matthew, please go ahead. I'm sorry, gentlemen, you thought you were going to escape, But just one question. In some markets, if one delves down into the sort of wage rate inflation numbers, you can see some slightly elevated levels, security guards at 10% in the States and some IT doing almost double digit in parts of Europe. Are you seeing any pockets you mentioned the sort of scarcity helping pricing a little. Are you seeing any pockets of emergent wage rate inflation? Some of your peers seem to be. Yes. It's we mostly see it but the only sector where we really see it is a bit in blue collar U. S, but that's already quite a while. In Europe, not so much, no. So it's mostly in Europe, it's mostly our volume growth, which in a way is good. There are discussions about this. So we might see that coming through going forward. But in our books, as per today, very little. Do you monitor sort of wage rate inflation? Do you get reports on it yourself? Or do you see the volume and then the sales and sort of do a back calculation? Just to add to that. Yes, we do that kind of analysis. We, of course, follow tightly the average the bill rate per hour, so what do we charge our clients' power, and that helps us to understand what's happening. We have no further questions on the line, so I'll hand back to the Randstad team to conclude. All right, operator. Thank you so much. Thank you all. It was good to discuss with you this quarter. That was a pretty strong quarter, I would say. We're looking forward to discuss the opportunities in the space of Tech and Touch Digital at the end of November 21st November in London. Hope to see you then. Bye bye. This concludes the Randstad Third Quarter Results 2017 Conference Call. Thank you all for joining and we hope you enjoy the rest of your day.