UPDATE 2-Randstad may cut 2013 dividend as crisis hits sales

Wed Nov 21, 2012 5:40am EST

Related Topics

* Oct. sales per working day -6 pct vs -3 pct in Sept.

* Dividend cut possible due to lower pay-out range

* Profit margin lowered, analysts say

* Shares down 3.3 pct at 16-week low (Adds detail, analyst comment, shares)

AMSTERDAM, Nov 21 (Reuters) - Dutch staffing group Randstad flagged a possible dividend cut and said a drop in sales accelerated last month as companies hold off from hiring temporary staff because of the euro zone crisis.

Randstad, the world's second-largest temp agency after Swiss rival Adecco, said on Wednesday sales per working day fell particularly sharply in France and Germany, with declines of 14 percent and 9 percent respectively in October.

Adecco said two weeks ago it did not expect an improvement in Europe's job markets until late next year.

The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter, despite modest growth in France and Germany.

Randstad sales per working day fell 6 percent in October, after a 3 percent decline in September.

Its dividend is 1.25 euros, based on a strategy of paying out 30-60 percent of adjusted earnings per share.

Randstad indicated it may cut its dividend next year, as it switches to a pay-out ratio of 40-50 percent of adjusted earnings per share, and offers investors the choice of taking the dividend in stock rather than cash, which some analysts see as a sign of financial weakness.

"The dividend for 2012 is likely safe but, based on current forecasts, 2013 (is likely) to be cut," ING analyst Marc Zwartsenburg says in a note about Randstad, adding the payout from 2013 earnings could be cut to 1.03 euros from 1.25 euros this year.

Randstad shares fell 3.3 percent to 24.32 euros by 0926 GMT, hitting a 16-week low, and also weighing on shares of Adecco and British rival Michael Page, whose shares were down 1.2 percent and 1.0 percent respectively.

Randstad, which makes about 68 percent of sales in Europe, also said it would now aim for an earnings margin of 5 to 6 percent of sales "over time", whereas previously it had aimed for such a margin "through the cycle". Analysts said the change in wording signalled a lowering in the operating margin target. (Reporting by Gilbert Kreijger; Editing by Helen Massy-Beresford)

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