Our markets have shown structural growth since the company was established in 1960. Going forward, internal and published studies indicate continued structural growth in our markets. We will continue working on our performance by remaining focused on our strategic goals. Our strategic agenda has a number of primary components, which are visualized in the diagram below.

Our building blocks represent the strategic ingredients for success. The external growth drivers are found on the right. In combination they enable us to grow our business in all five service offerings, shown in the center, and to reach our strategic financial targets, which are listed on the bottom. Our strategic targets were established in 2002 and have only needed minor updates since then. 




Strategic growth drivers
Need for flexibility
One of the most important drivers of long-term structural growth in our markets is the need of both our clients and candidates for flexibility. There is a growing recognition that a more flexible workforce helps our clients to improve productivity and be more competitive. The depth of the economic downturn in 2009 – together with the speed of the subsequent recovery in several markets – has made it clear to many companies that more flexibility enables them to adjust to changing volumes in their business more effectively.

Demographics
Studies by SEO Economic Research (Mind the Gap and Bridging the Gap) that we supported revealed that aging and declining population growth will cause an enormous scarcity of people with vital skills in most developed countries in the future. Unless participation rates, productivity and employee mobility are improved, it is estimated that there will be a potential employment gap of 35 million people in the EU labor market alone by 2050. As well as this quantitative gap, skills shortages will play an equally important role, as the demand for employees with specific skills continues to intensify.

Deregulation
Another driver of market growth is deregulation, a factor we try to influence as much as possible. While deregulation is a well-known and accepted term, we stress that we are not looking for a system without rules. In fact, we strive on the one hand for the lifting of unjustified restrictions in overregulated markets, and on the other for a fair and effective regulatory environment in markets where this has yet to be introduced. New opportunities continue to open up as governments increasingly recognize the need for flexibility in their employment market.

Clients look for a total offering from fewer suppliers
Clients are increasingly looking for fewer suppliers, and from those suppliers they tend to use a broader range of HR services, from staffing services through the recruitment of professionals to outsourcing and the provision of managed services. This will not necessarily enlarge the market, but as Randstad has a uniquely comprehensive portfolio of services and a strong presence in almost all major markets, we are well placed to gain market share because of this trend. 

Strategic financial targets
Our EBITA margin in 2010 was 3.6%, close to our ambition level of at least 4%. The minimum 4% EBITA margin we aim to achieve was set for a normal downturn scenario in which revenue declines by 10% for two consecutive years, followed by a 5% decline in a further year. The revenue decline during 2009 was steeper within a single year than this stress case scenario had anticipated totaling over three years.

We intend to reach the 5% - 6% range as soon as possible. The speed and magnitude of the recovery plays a role in this respect. As we experienced a classical recovery pattern in our industrial segments, mainly serviced through our inhouse concept, these started to grow first. As lower-margin business starts to grow first, it takes longer, after such a severe downturn, to restore profitability levels. As growth in our higher-margin clerical and specialty businesses and our professionals business returned to growth later in 2010, we are confident that our profitability will improve accordingly.

We undertook major efforts during the course of 2009 to protect our profitability. As we moved into 2010, we improved our market focus. During the second half of the year this started to pay off, with market share gains in most of our markets. Solid profitability and a strong focus on cash generation enabled us to improve our net debt position from € 1,014.7 million to € 899.3 million. The leverage ratio improved accordingly from 2.5 to 1.5, so within our targeted range of between 0 and 2. As a result we will propose to our shareholders that dividend payments on ordinary shares be reinstated. With our diversified exposure to all segments and major countries and our strong balance sheet, we are confident that we will reach our financial targets.