* Job cuts to be announced next week
* CEO denies he plans to cut 25 pct of workforce
* CEO says divestments will not be needed
* Shares up 3.3 pct, lead midcap gainers
(Adds analyst, company comments, details, share price)
By Aaron Gray-Block
AMSTERDAM, June 29 (Reuters) - Dutch staffing firm USG People , hit by weak growth in its home market, said on Wednesday it will announce another round of job cuts next week to boost margins but has no plans to sell any of its businesses.
USG, which is Europe’s fourth-largest staffing firm by revenue, makes 38 percent of its revenues from the Dutch market, where the public and financial sectors were hammered by the financial crisis and by government budget cuts.
A company spokeswoman confirmed comments made by its chief executive to a Dutch newspaper on Wednesday. Rob Zandbergen told Het Financieele Dagblad that the group planned to announce a round of job cuts next week, but denied speculation that it would lay off a quarter of its 8,000 employees.
“I can’t say how many, we are still in talks with the employees’ council. But 2,000 (jobs) from the 8,000 is absurd,” Zandbergen was quoted as saying.
Zandbergen told the newspaper there was no reason to divest operations in France, Spain or Italy as these were performing well, with Spain even showing growth.
Shares in USG People rose as much as 3.3 percent to 11.605 euros after the newspaper report, to be the top gainer in a positive Amsterdam midcap index .
ING analyst Marc Zwartsenburg said he expects the next round of layoffs to involve about a couple of hundred jobs.
“The Dutch cost savings will help margins, but there’s also a dark side to it, because it means the Dutch market is not getting any better,” Zwartsenburg said.
He said the Dutch market still faces a lack of volume growth and pricing pressure, and any margin boost from the layoffs could be offset if economic growth stalls.
USG and its peers Manpower of the U.S., Dutch rival Randstad and Switzerland’s Adecco , are seen as barometers of economic health, and usually benefit in times of economic recovery and uncertainty when companies tend to hire temporary staff.
Its plans to cut jobs follow profit warnings from several other Dutch companies including paints group AkzoNobel and electronics firm Philips .
USG was seen as a possible takeover target for Adecco, but ING’s Zwartsenburg said that was unlikely given that Adecco is more interested in the professional market while USG is more of a generalist staffing firm.
The job cuts will mainly be in the back office operations and at USG’s headquarters in the Dutch city of Almere following the introduction of a new IT system.
USG, which raised 86 million euros in a share issue last year, cut 1,750 jobs in 2009 -- or 19 percent of its workforce -- during the financial crisis and a further 120 jobs in 2010. At the end of 2010, it had a total full-time workforce of 7,228.
The company’s earnings were hit by job cuts in the public and financial sectors, with the Dutch government announcing 18 billion euros ($25.5 billion) in budget cuts in coming years.
Dutch banks ABN AMRO , ING , SNS Reaal and insurer Aegon are also restructuring after they were crippled by the 2008 financial crisis. ($1=.7062 Euro) (Reporting by Aaron Gray-Block; Editing by Sara Webb and David Holmes)