Earnings Call: Q2 2017

Jul 25, 2017

Good morning, ladies and gentlemen, and welcome to the Randstad Q2 Results 2017 Presentation. My name is Holly, and I'll be the coordinator for today's conference. During today's presentation, you will have the opportunity to ask a question. I would now like to hand over to your host, CFO, Robert Bandikatz, to begin today's call. Robert, the line is now yours. Thank you. Hi, good morning all. Welcome to the discussion on the Q2 results. I'm here together with Jacques van de Groek and David Tayer and some others supporting us. I'm going to go through a presentation as regular and then move to Q and A after that. Let's move to Page 5, Slide 5 right away, which summarizes the key items for Q2 and very clear is that Europe is gaining further momentum to its acceleration. We've seen organic revenue growth of 9.3% and also pretty good gross profit growth almost 8% up. Top line was accelerating in Europe, as I mentioned, more or less stable in North America and also pretty good in the rest of the world. The gross margin was stable underlying permanent fees up 7%. Organic OpEx were up 5%, much better in line and ICR as a result of that improving. The underlying EBITDA came out at 2.62%, a margin of 4.5%. And please note that this includes an impact of 50 basis points, which relates to on the one hand, one working day less, a bit more than one working day less actually, which was a benefit in Q1. It's a disadvantage in Q2. And also in Q3, by the way, we'll miss out on one working day. And then we have a 30 basis points impact from digital investments, which includes Monster. The leverage ratio of the company, 1.5% impacted by seasonality and also by M and A. We have our digital initiatives in full swing and we'll talk more about it. We'll refer to it a bit in this presentation, but we'll talk much more about it during our Capital Markets Day in London on November 21. The volumes early July indicate a clear continuation of the Q2 trend and the Q2 trend equals roughly the June trend, so that moves into July. All our acquisitions are on track and we have launched some key initiatives at Monster. So overall, I would say Q2, we're very we're pretty satisfied with what happened in the Q2. And as we close the call on Q1, we refer to the balancing act with on the one hand our focus on decent operating leverage, so good operational performance aiming at an ICR of around 40% organically on the one hand, as I said. And on the other hand, we are making the necessary investments to make the company future proof through the investments in the digital space. And those 2 have to go hand in hand and that is the balancing act. And I would want to say that I think the operating leverage is coming through quite nicely now with market share gains in pretty in quite some markets. And please note that the working day impact of 20 basis points should be taken into account when calculating this. We also had quite some good contributions from our mid sized operating companies across the board. I think that strategically is also a point to note. Slide 6, the P and L of the company, which I want to point out again good gross profit growth per working day as well. And if you look at the gross margin, it is roughly flat compared to Q1. And I'd like to point out here that the growth acceleration in Europe is coming through in countries with a slightly lower gross margin and also in our business segment, RunSpot in house services with a somewhat lower gross margin, but as you know, with a very good return. So we are pretty happy with these numbers as a result of that. Our perm growth in the 2nd quarter de celerated a bit from the 11% to 7%, but please note that this is a volatile business. I'm moving to Slide 7, which shows you the world. And it also indicates once again that planning in our business is quite a challenge and that is why we have chosen to respond to actual data and again that proves to be the right approach here. We see clearly an acceleration in the European markets. As I said, America fit, but the rest also moving into the right direction. Slide number 8, which is America, stable top line at 1%, perm grew by 3%. Our U. S. Staffing and in house business, we did see revenue growth continuing at the level of 2%. In professionals, I'd like to point out that our IT business improved from growth 1% in Q1 into 2% in the second quarter. We also watched the BNS data. The BNS data are slightly up in Q2, but after the ASA data, which is weekly averages only is just slightly down. We see we continue to see, I should say, a limited effect of wage inflation on the gross margin in the U. S, which is absent by the way in most other markets. In the Netherlands, we have a very strong focus on Slide 9 on profitability. Given the pricing pressure in the market, our revenue grew by 2%, which is better than the Q1 1. We also are narrowing the gap to market. We see good double digit growth in SME and in house services, but our key focus is on profitability because there are too many unattractive transactions in the market, both in terms of pricing and in terms of payment terms. Our combined staffing and in house business up by 3%. We did see very good growth in professionals gross profit up by 8%, which also results in a clear improvement at the EBITDA margin level. And our pricing tool that we are using here to detect scarcity and make sure that we charge the right prices for that scarcity is really paying off. And that results in maintaining our EBITDA margin at 5.8%. In France, which I think is party time more or less accelerating to double digit growth from 9% in the first quarter to 14% in this quarter, staffing and in house double digit professionals accelerated to 19% and our perm grew by 43%, which is clearly fueled by the tech solutions that we have put in place. And by the way, we also see tech having impact on the rest of our business, on the growth in the rest of our business. Our EBITDA margin is up by 50 basis points, as you can see. That is a cocktail. The impact of CICE is coming through, but also continued pricing pressure takes a bite in our gross margin. But on balance, we see this clear improvement. On CICE, you might have noted that it is now sure there will be no change in 2018. And it's a bit too early to give details on 2019, but there is a clear awareness at the government that this kind of support for the labor market needs to continue. The only question is in what form. Moving to Germany, which is continuing to grow at a pace of 9% and SME now continues to outpace the growth that we see at large clients, and this is also very much a result of our own strategic focus. Term growth also continues nicely. And as you can see, we can see improvements in the professional space. Now EBITDA margin is slightly down. That does not worry us because it is clearly the reflection of the impact of working days in Germany, 3 fewer working days and also the contributor is working days here. Belgium, Slide 12, accelerating top line with record profitability and clearly ahead of market revenue now at 14% where staffing and in house is leading. Actually, that's a point to make in the European acceleration. We do see industrial growth very often served by Randstad in house services taking the lead, which in many ways is logical when an acceleration is coming through. The EBITDA margin came out at 6.5% compared to 6.3%, so another improvement here. Iberia on Slide 13, very strong top line trend as well here. If you look at Spain, it's a reflection of tight operational steering through ABFS, revenue growth now at 19% and also perm continues to grow. But as I said, that's a volatile business. Revenue growth in Portugal at 8% and an excellent EBITDA margin now of 5.1%. And we've put in the ICR here just to show what is feasible if things are all going into the right direction. And then we have the miracle in Italy, 14, Slide 14, continued high revenue growth. It's not a miracle in terms of high growth, but not a miracle in terms of high growth, but the fact that the integrated business is performing so well of the titular boro, I think that is something that we should point out. It is clearly contributing to high growth in Italy as well now. By the way, it also indicates our ability to grow 29% is high, but with our standardized best practices, we are able to serve this kind of opportunity. Also in Italy, a lot of growth in the industrial sector driven by in house. EBITDA margin is 5 point 8 percent now. If one would make an adjustment for the acquisition, the improvement would be 100 basis points. On Slide 15, the other European countries, not a bad story at all. If you look at the UK improving to 2 percent positive territory, also Nordics in double digit space now with the profits integration on track. Switzerland 'twenty two continues at a very high pace, thought it's also a good improvement. And the EBITA margin slightly lower, again, this is solely the impact of working days effect in our big Nordics business. Slide 16, the rest of the world, also improved revenue growth here across the board, Japan at 6% compared to 7% in the previous quarter. Also here, our acquisition is also challenging us on the growth rate by coming in with 18%, Australia, New Zealand, 14% China, 10% Latin America, 21% and the EBITDA margin, which is a key focus here, improving to 2.6%. Looking at our M and A track record here, RiceSmart, it is underway. Profits, I referred to it, it's in line of the Atifo Lovato. I cannot say anything else, but that it's ahead clearly. Carrillo also ahead. At Monster, we'll talk about on the next slide, DMC, the acquisition in the professional space in the Netherlands ahead and OC underway. By the way, on this slide, the first three columns indicate the reason why we made the acquisition and the 4th one is showing us our progress towards EVA after 3 years. The 3 columns, the first one is bigger in staffing, the second one is bigger in professionals and the third one is to accelerate our digital strategy. Chuck will now talk a bit more on the progress made of the Monster. But before doing that, in terms of synergies, I want to point out once again that we've made this acquisition also with the synergies in the first two blocks in mind. On the one hand, these were the eliminated public cost of the company, which provides us with savings of 7,000,000 annually. And also the specific tax structure of the company providing us with the opportunity to depreciate the goodwill resulting in an annual €17,000,000 benefit from tax. So that sets the base for the remainder of the investment to be justified by the other initiatives on which Jacques will now share So my steps with you. Yes, good morning, everybody. Most of our work, we knew most of was a company that needed improvement. As far as we're concerned, it always starts with leadership. So we have a new management team in place at Monster since May and are doing a few things. First of all, they're taking a very good look at our cost base. We think the cost base of Monster have some improvement potential and we aim to have a significant cost saving within Monster, which we plan to announce in Q3 or at the Q3 presentation. 2nd one is the brand refresh. So Monster is very well known with millennials, which is a crucial audience for us, but in general in the labor market. So some of you might have seen the approval of fuzzy monster out there. First indications are that this leads to traffic, which is always the start of the recovery of this business model, early days I said, but it gels well with the millennial audience. And then another thing which is important for us is the most capabilities for Randstad. So every Randstad consultant in the U. S. Or and in Europe now has a full suite of Monster products at its disposal. And we really learn here. We're learning from Monster how to communicate with an audience through digital means. It leads to more traffic for our consultants in Europe and U. S, which is crucial in the labor markets because candidates are increasingly hard to find. So part of work, as we mentioned, it will take to 'seventeen to repair and improve this business. Thank you, Jaak. Moving on to the financial results and the outlook on Slide 20, the P and L again. Once again, I would like to point out that typically in terms of seasonality, Q1 is the softest quarter of the year, then Q2 is stronger, Q3 is the strongest and typically Q4 is close to that, but just below, that's a normal pattern. Of course, accelerating growth or changing changes in growth rates can have an impact here. I think we have addressed most items in the P and L. Please note that the EBITDA margin 4.5% here compared to last year 4.7%. Again, the working day impact calculated at a negative 20 basis points, which was a benefit in the Q1 and on top of that, the 30 basis points digital investments. We also incurred some integration costs and one off, euros 8,000,000 relates to integration and euros 4,000,000 to 1 offs. Our net finance cost, it looks as if interest is a little bit higher, that's not the case. It's stable compared to Q1, but we also have some other items here such as foreign exchange. Moving on to our segment reporting on Slide 21. I think a pretty good story here, staffing improving to a return of 5%, as you can see. In house services, it is hovering around a very decent level. You might note our previous statements, our historical statements that this segment should deliver us between 4.5% 5% EBITDA at the max. Well, we have been there for many years now. So these are sort of the levels that we are aiming for. A bit more this time from our French business coming in that might depress it a little bit, but I think across the board, this is a pretty good performance. Our professionals business was impacted by the working day impact in the second quarter, but across the board also if you look at the 1st 6 months, you can see an improvement here. And our global businesses that it does include the investments in the digital space through Monster. Our gross margin bridge on Slide 22, which is a year on year percent to 20.4 percent this year, actually 2 key components here next to slightly lower perm placement growth. It's the big green box, which is the addition of Monster, which comes in with, of course, a very different P and L structure and as such that has an impact on the global gross margin as well and the temp margin being slightly lower, which mainly includes the growth, as I said at the very beginning, in markets with a somewhat lower gross margin mainly served through our in house model with, as you just saw, good returns. Operating expenses bridge. Now on Slide 23, which is a sequential analysis here from Q1 into Q2 and what you see here is clearly that, yes, better leverage than in Q1. I think that's something as a board that we have focused on. We've tightened our steering in that respect. And you can see here our organic investments, our M and A. Again, these are not the transaction costs, these are the costs related to the companies that have been acquired. But across the board, I would say a relatively standard and normal picture here. Net debt on Slide 24 at €1,500,000,000 roughly our leverage ratio of 1.5 And when discussing the P and L, I refer to the seasonal impact. Please note that throughout the year, the Q2 position in terms of net debt is the highest point, if it's a net debt by the way through the year because that accumulates our dividend payment, the payments of the holiday allowances. And in the second half of the year, we don't have those items. So we should see deleveraging towards the end of the year as we always see. What you also see here is the impact on DSO. This is also our growth in companies with somewhat lower gross margins, as I said, but they also come in with slightly higher DSOs. And that is what you can see coming through here next to the acquisitions. We have already explained the Italian acquisition that came in with very high DSO, and we're currently working on bringing that much more in line with the rest of the business. I'm moving to the free cash flow now on Slide 20 5, that is a few things here, a change in our operating working capital, that's a negative, which is again completely in line with the acceleration of the top line in countries with slightly higher DSO and also our acquisitions. It also includes the adverse effect of some positive timing differences from the Q1. So the reversal of favorable timing of payments from Q1 into Q2. If one neutralizes for that, the picture is standard. Our net capital expenditures, I think that's a great expression that we do control our digital investments well. And finally, the CICE inflow is not yet there. We do anticipate an inflow of 70,000,000 in the Q3, which is the first kind of installment from the French government that we should receive in Q3. And as you can see here, the dividend payment in line with the decision to pay a cash dividend only. That brings me to the outlook on Slide 26. Our organic revenue growth was 9.3% in the 2nd quarter, which is in line with the June exit rates and the indications in July. As you can see here, the exit rates in North America, low single digit in the Netherlands also. And then we have a wonderful table of countries with high digit or double digit growth, France, Germany, Belgium, Iberia, Italy, rest of Europe and world as well as global businesses growing at either high single digit or double digit. So you can hear the tone of voice reflecting that I think we're very happy to see this coming through. Our gross margin in Q3 is expected to be slightly down sequentially as always. Actually in Q2, we expected an improvement, but that didn't happen because of the acceleration of growth in the South European markets mainly. For Q3, our operating expenses are expected to be lower sequentially on an organic basis. And this relates to seasonality again and we're also looking at making some adjustments in the cost base of Monster. Then we have our Q3, I already mentioned it. We have an unfavorable impact of one working day. We don't just expect it. We know for sure it's going to happen. Our M and A activity will continue to be limited in the coming quarters. And finally, we'd like to share a lot more with you on a Capital Markets Day on November 21 in London, And we hope to see you there. So we hope this elaboration deals with most of your questions. But if you have any left, please go ahead. Operator? Thank We have a question from Tom Sykes of Deutsche Bank. Tom, the line is now yours. Good morning, everybody. Just briefly actually on the growth of in house in Iberia and Italy and just whether you could say where do you I mean, not exactly, but where do the gross margins and operating margins of an in house model in those countries compare to where you are in the Netherlands, please? And maybe just if you can kind of directionally, where would you say your in house profitability is in the Netherlands compared to, say, a couple of years ago, please? Hi, Tom. Good morning. Our profitability in the in house business is sort of hovering around this 5%, a bit lower, a bit more. So I think these are the indications that we can share with you. And as I said, the growth came in with just below the average of almost 5%. Okay. But do you think that the I mean, is the conversion ratio that you might be able to get in Italy and Iberia a bit better than you can get in other in house. But obviously, it's growing quite quickly, if you like. Non Netherlands in house is growing quite quickly. And so therefore, is that a net net positive for you when you look at the margin that you can get on in house overall? Yes, Tom. It might also mean some additional expenses. Italy never had a big base of in house. It has grown rapidly over the last 2 years or so. So I think we still have some opportunity for optimizing that result. But it's all around the 5% mark. Okay. And Tom Schack here to elaborate. So conversion is definitely the name of the game in our in house business, in our large client business in general. Again, this is where technology plays a role. So on the agenda of the Capital Markets Day will be technology in this space. So watch that space. Okay. If it's possible to ask a very brief follow-up. Just on Germany, would you be able to say what the autos and nonautos businesses are doing in Germany, please? Yes. Our growth is pretty stable in many industries. Of course, auto and anything related is an important sector in Germany and is actually doing well. It's an essential part of the economy. So Tom, thanks for limiting yourself to 2 questions. I would want to ask everybody to do that. Our next question today comes from Toby Reeks of Morgan Stanley. Toby, please go ahead. Could I have one on Monster and then one on CICE? So could you talk a little bit more about expectations around investment in Monster, the tax benefit that you guys talked about. Is that multiyear? Is that 1 year? And then you've sort of lifted your skirts a little bit on Monster cost management going forward. Is there anything we can expect from that? And then on CICE, what would that look like if we move to subsidy? Could you talk make a few comments around that, please? Yes. So on the Monster tech side, we're first using our the remainder of our losses that we can compensate for our tax accounts. And we anticipate that that will not take a very long time. It's a few years and then we'll get through that depending on our results, of course, and then we'll move into using these and these can be offset at the U. S. Level. So this is like a pretty good foundation in terms of upside. Further investments in Monster, we're working hard on reversing the trend. And I think, as I said, we're underway. We'll share more about that. At the Capital Markets Day And we're very tight in our steering here. We do see some efficiency opportunities that we won't wait addressing it. So that's going to happen soon. Can I just sort of ask a couple of things? One is, are you able to quantify the tax losses that we should be assuming over the next few years? And then on those investments, do you perceive that, for example, in 2018, you'll be offsetting the additional investment you're making in marketing now for Monster with those cost savings. Is that the sort of way we should think about it? No, no, that's not the way we thought about it. When we looked at the transaction economically, we looked at what we can sort of compensate through cost reductions, the €7,000,000 and tax planning, which is the €17,000,000 and that will come in, as I just said, when we go through our net operating losses. So that is sort of the isolated sort of technical side. Next to it, we have just running the company operationally. Yes, so Tobey, the cost savings we're planning to realize will, to a large extent, be used again to invest in the business. And what I mentioned, mostly in marketing and next to that also investment in product. So for example, they've now launched a new mobile app to connect to candidates that works well, but those are investments. So saving on the one hand, investing on the other. But too early to talk to you about an outlook for 2018. As Robert John said, very much like to share with you that what we know and what we plan for in November. Okay. And on the CICE side, first of all, as I mentioned, 2018, it will continue as is and 2019, some statements have been made that the preferred model would be to change it into a discount on social securities. But one needs to see whether that happens because it will have an impact on the French state balance sheet. So that's in the minds of the politicians. But we're very happy to have that confirmation that such an essential element of support to the French labor market and especially at the low end of it, 2.5 times minimum wage, remember that, that is to continue. We're happy to have that confirmation now. Okay. Thanks, guys. Thank you. Our next question today comes from Mark Swartzberg of ING Group. Mark, please go ahead. Yes, thank you. Two questions, 1 on Monster and 1 on France. First on Monster, the revenue decline is roughly stable. Would the cost savings in the end also have an impact on your top line? And can you give a bit more color when you would expect to see some stabilization of that or some bottoming perhaps of the top line? And then on France, the now above market was not the case in Q1. Jacques, is it too early to already say that this is already seeing, say, sort of the impact from your tech and touch strategy? Or is that too early or should that be adding to your second half growth rate? Those were my 2 questions. Thanks. Okay. Well, let's start with Gilberto, and good morning. No, we definitely we see it in many parts of our French business, most prominently in the perm business, but certainly also in staffing, our people use our big data tool. So every morning they can see where there's demand. They've got some dashboards that they use on a client level to talk about the ideal profile to immediately reach out to the candidates. So that does have an impact, absolutely. Having said that, pricing pressure in France is not over yet. So we still see some clients with, let's call it, funny demand. So the overall picture of outperformance might be slightly tainted if we don't rule out in the second half of the year that we still might take decisions on client level, but then very much because it's not a profitable business. But where we are where we want to grow, we're very much growing in France as a result of the support mostly of technology, not just technology, but it helps. On Monster, Mark, the cost savings, we're going to a full analysis of the current cost at Monster. Obviously taking out cost, which doesn't affect our top line. But it's too early to say where the current top line development is going to go. This is a sequential picture. You first start to invest in marketing, then in product, then you get a better seeker experience, so you get more traffic on your side, which you then need to sell to your clients. This takes time. So this is too early to say. Would you expect to say something on, say, November? Is that a good point to give a bit more color on where we stand? Yes. We will comment on what we think are important parts of our strategy going forward and digital, of which Monster is a big component, will definitely be on the agenda. Yes. Okay. Thank you very much. Our next question today comes from David Phillips of Roseburn. David, please go ahead. Good morning. Can I just talk a little bit about the German margin down 80 basis points? And on in the commentary, you said that was all down to working days. Could you maybe just break that down to help me sort of solve the puzzle a little bit? So I'm getting a slightly then there may be something else involved in there as well. Actually, there's nothing else involved in there. And please note that the structure of the German market is such that our employees, the employees that are at work with our clients are either on a contract for a defined period of time or for an undefined period of time, and we pay them monthly wages. So let's say the cost side is fixed and the income side is depending on the number of hours that these people are working. And then we have the hurdle of having the bank holidays, but and let's say, in general, less working days. And even in some cases that people take off days just before or after those bank holidays. So that is the analysis of our German, let's say, business. The result is solely of the change, the delta and the result is solely related to this impact. Yes. So underlying, David, our margin is actually quite stable. It's a similar picture you see in other markets. Our SME business is outgrowing our large client. This has an upward effect and we grow around 20% in Germany. So that also helped. Okay, great. Thank you. And your Canadian performance is quite good. North America up 1%. So presumably, the rest of the U. S. A. Running about flat, which I guess is slightly better than we saw from some of your competitors yesterday. Could you say a little bit more about the industry pattern that you're seeing? And also you mentioned some wage inflation, can you put a quantum on that in North America? We want to talk more about Canada. Yes. We do see wage inflation in our staffing part, so around 2% to 3%. Yes. And we see low level low single digit growth in our staffing business, so slightly ahead of market, mostly driven by our in house blue collar business. And we see still a negative performance in our Professionals business, very happy with the trend in our business, our technology business, which is now growing, but still in our Financial and Accounting business, Russell Professionals as we call it over there, that's still negative. So work to do. Our next question today comes Comrade Zomba of ABN AMRO. Comrade, please go ahead. Hi, good morning. Just one question for me. On your French perm business, you mentioned it was fueled by tech. I just wanted to clarify, is that because of the Allsee business that is pushing the growth rate up and the margin up? Or is that because of your digital, big data, technological improvements that you've put through in France? That is the latter, though it has nothing to do with OC. OC is also a perm business. So OC is an IT and engineering business that has the people on a contract. So if there's any perm at OC, it's very, very limited. Now it's very much tech connote. So as you know, perm is a business which is quite transactional. So it's quite important to see where demand is. So every morning, our French colleagues can see that. Perm is also a business, which you need to discuss the profile, what are you looking for, is this profile to be had, what's my employer brand in the regional labor market, all that data is available at the hands of our consultants. Actually quite an impressive set. I talked about it at a breakfast session in London a little over a month ago with a few of your colleagues and happy to do so again in London. So we'll make a selection just to show you how this works. We're very happy with the performance with me even more happier with what it brings to our consultants. Their job is it was already a great job. I think it's an increasingly better job, which is the ambition we have for all of our consultants going forward. Yes. And on top of that, I also think we should add that the rest of our business, our staffing business is also supported by Tech Tools, which we have shared with you a while ago and which are used to the full extent and clearly supporting the growth rates in this market as well. Our next question today comes from Andy Grobler of Credit Suisse. Andy, please go ahead. Hi, good morning. Just a couple from me, if I may. Firstly, just on digital, and I realize you've talked about some of this previously. But you mentioned kind of GBP 17,000,000 GBP 18,000,000 of cost during the quarter, the 30 basis points margin. How much of that, particularly as it relates to Monster, is one off, so just for Q2 and how much of that is going to be ongoing? And then secondly, on Italy, where growth was very strong, I think into Q3, OL annualizes. Can you split out the difference in growth rates between the Randstad businesses and the OL businesses? Thank you. I'll take the latter one. It's now an integrated business. So what is the interesting point to make is that Q3, at the top of my head last year Randstad has sold double digit growth, but OL was actually negative. And now the combined business is growing organically 29. So I think you can say this is a world class integration. We're very impressed with what our Italian colleagues have done there. We've not lost any consultants. So given the fact there was already a growth market to begin with, we left everybody at the front end in place. And I think in hindsight, it was a very good decision. Yes, and people pick up on the growth momentum that was there. So very happy with that one. Yes. And on digital, we announced that we would make an additional investment in marketing in Monster, which probably adds up to some €7,000,000 But please note that we also are making investments in other digital investments in the company. But the biggest part of the 30 basis points is indeed Monster. So just to follow-up on those. So as we go into Q3, that $17,000,000 $80,000,000 is will be dropping to $10,000,000 $11,000,000 Is that a reasonable That's rather precise. We are also working on further investments in Monster. So you have to give us space to operate this business with a few millions of own decision area. Yes, maybe also on digital. So this is not just cost for cost sake. Yes. So we are finalizing products that we're going to roll out. So whenever we see a great business case to support our people, we're going to invest to roll this out. Like I mentioned, for example, on our what we call job scheduling space, we are preparing a rollout based on, again, the good experience we've had in our French business on, I would call, automated planning. So that's an investment. So but these investments drive business cases. So this is not a static number. No, No, at all. And in the most part, we could give you the additional investment amount, but we're also going to go through some additional savings. So it would be too precise. But I think we're not discussing here big deviations. Okay, great. Thank you very much. Our next question today comes from George Gregory of Exane. George, please go ahead. Good morning. Just one for me, please. On the tax rate, I think your effective tax rate was 27% for the first half, and you're indicating that it will be at the upper end of your range for the full year. Just interested in what is pressuring the tax rate upwards and also when you'll start to realize the tax synergies? Thanks. I think Chuck wants to answer this one. He's looking easily at me. George, this is purely mix, mix of earnings in various tax geographies that's causing this. Our cash tax rate is clearly below this And usage of the Monster benefits is a factor that depending on how quickly we run through the existing net operating losses. But this is not going to last for like a decade or whatever. It's going to be addressed earlier if we continue the current trends. And George said that the tax asset of Monster will mainly impact the cash tax rate. Okay. Thanks. Yes. Our next question today comes from Rahesh Kumar of HSBC. Rahesh, please go ahead. Hi, good morning. Just one question from me. When you talk about candidate scarcity, which are the regions you've seen candidate scarcity? And I know you referred to big data earlier. Could you elaborate on how better you're able to identify these pockets of scarcity? What's it done doing to wage inflation? How your data tools are playing into that? That would be very helpful. Yes. Scarcity of candidates is pretty broad based, definitely in certain areas in the U. S, in Europe, increasingly in the Netherlands, Belgium, well, the Dutch speaking part, Germany, certainly the southern part over there in any professionals part. So our ambition really through digital reaching out to candidates is staying in contact with them. So we feel that active job seekers will be very limited going forward. So it's all about managing and staying in contact and engaging passive job seekers. Again, this is where the capabilities of Monster come in. So we've got the ambition to stay in contact with 300,000,000 to 400,000,000 people that have connected with IDA Manso or Randstad and connecting with them whenever they are eligible for a new job. So that's how we're going to address scarcity. Next to that, as you know, we're a global company. So we do see demand in Europe, still candidates in Asia. So this is early days, but we definitely expect more mobile traffic, more mobility throughout the world on candidates. And this is also where we're going to play a role here with our larger clients. Is very much also where stores like plays a role. So what you see is that our role for clients is very much, of course, it's still about getting them the candidates they want every day, but it's also navigating the future for them. Where will I get my candidates from? Do we need to train them? Do we need to change my profile, the setup of my company in what I buy or what I employ myself? So this is a role that we play. And again, technology and data will help us there. So is it more related to the SME customers, large customers? Or is it in a certain sector IT or manufacturing? Could you give us some flavor in terms of where the scarcity is building up? Well, interesting enough, given the fact that any industry is now software based, so relevance of scarcity in sectors is not so much the case. It is still in Europe, blue collar is not scarce yet. But looking at the economic improvements and also demographics, we also expect this to become more scarce. So scarcity is more at the middle to top end of the labor market certainly in stem job. And not so much small companies or big companies, it's pretty much across the board. Thank you. We have a follow-up question from Mark Swatzenberg of ING Group. Mark, please go ahead. Thank you. A quick follow-up. On the Netherlands, the comps should be getting easier now. What should we expect to see some acceleration there in the second half and getting your shares in July trend perhaps? Yes. That's tough to say, Marc, because as you know, we take decisions on clients. So on the one hand, we see good growth as Richard mentioned in our SME business and good pricing, good growth in our in house business and good conversions, but we still have some tender runnings on clients. They still need to be educated on where the market is going and we might still take decisions that will affect our top line but not our bottom line. So that's tough to say. Yes, but that's already the case now for several quarters and that the market is so aggressive. Is there any change possible that you might say, okay, we changed strategy, we take losing a bit of market share that you say, well, we draw a line in the sand and Well, we definitely draw a line in the sand, Mark. And yes, well, we grow 2%, 3% less than we could on the base of these decisions. We got a very profitable business growing in house, growing in growth and perm. So we're sort of happy. We do think that when the economy improves further, that clients will see the light. Okay. All right. And maybe one quick follow-up on the gross margin for the group. How much would you say is the pricing impact on the group level from say the light of the Netherlands on France? Mark, it's David. It's limited. So there's actually a mix effect of in house, which is about 20 basis points negative. And there's some slight impact of pricing and working days. Okay. All right. Thank you. Gentlemen, we currently have no further questions. So I'll hand the line back to you. All right. Thank you so much for joining us in this call to discuss our Q2 results, and we're looking forward to again at Mayview in the next month or at the discussion of our Q3 results at the Bye. Have a good summer. Ladies and gentlemen, that does conclude today's call. Thank you for joining and enjoy the rest of your day.