Hiring firm Randstad's shares pop as revenue beat fuels recovery hopes

By Jakob Van Calster

July 22 (Reuters) - Shares of Randstad rose more than 7% on Wednesday after one of the world's largest staffing firms beat quarterly revenue growth estimates, signalling a rebound in demand across key markets such as the U.S. and Germany.

The rally helped push the stock further back into positive territory for the year after it had lost nearly 34% amid jittery labour markets.

The Dutch headhunter's CEO Sander van 't Noordende said that hiring was recovering as economic activity picked up, even as clients continued to grapple with geopolitical and economic uncertainty.

"What we hear from our clients is a lot of uncertainty given everything that's happening in the world, but also increased economic activity. And in that timeframe, clients prefer to work with flexible workers because that obviously gives them the revenues, but not the risk," van 't Noordende told Reuters.

Morningstar analyst Ben Slupecki said investors appeared to be betting that the downturn in hiring activity had bottomed out and that demand was starting to improve as European business activity improved, as reflected in purchasing managers' index data.

"PMI employment components are essentially a real-time proxy for Adecco's and Randstad's own client demand," Slupecki said.

"Although they have pulled back a hair the past two months, if you zoom out over three years, you can see why investors may be optimistic."

Randstad reported a 1.9% organic revenue growth for the quarter that ended in June, beating expectations of 1% growth in a company-provided analyst consensus.

Gross margin - a key measure of profitability - stood at 18.2% for the period, slightly below the consensus forecast of 18.3%.

The company added it expected gross margin to be "modestly lower sequentially" in the coming quarter.

Germany, Europe's largest economy, provided evidence of a recovery as revenue from that market rose 4% year-on-year, compared with a 4% contraction last quarter and a 7% fall a year earlier.

Iberia maintained strong momentum, posting revenue growth of 11%, while North America also improved, with growth accelerating to 4% from flat in the first quarter.

(Reporting by Jakob Van Calster; Editing by Mrigank Dhaniwala)