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Adecco’s revenue declines 5%
March 16, 2013
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ZURICH: Adecco, the world’s largest staffing company, said revenues had fallen 5 per cent in the first two months of 2013, extending a decline in 2012 that contributed to a greater-than-expected drop in profit.

The Switzerland-based company also said it would pay a larger-than-expected dividend of 1.80 Swiss francs ($1.90) per share, unchanged from a year ago.

Adecco added that it aimed to maintain or increase the dividend in future, which meant it could exceed its target payout range of 40-50 per cent of adjusted net earnings. “You shouldn’t expect any acquisitions in next couple of years,” Chief Executive Patrick De Maeseneire said in an interview, adding that the company would instead use its cash to support its dividend policy.

“We have committed to a dividend always equal to or higher than previous ones unless the economy declines sharply,” De Maeseneire said.

Fourth-quarter net profit fell to 35 million euros ($45.6 million), below average estimates for 88.6 million. The quarter included 46 mln euros of restructuring costs to integrate units and cut jobs.

Although operating income margins, before intangibles, slipped slightly to 4.0 per cent, Adecco said it could achieve its 5.5 per cent target by 2015. “Whereas the result will cause some pressure on the stock, the unchanged dividend and the commitment to achieve the EBITA margin target in 2015 should be a relief, said Sarasin analyst Patrick Hasenboehler in a note, confirming a “buy” rating.

Shares dropped 4 per cent to 52.50 francs, lagging a 0.4 per cent lower sector index.

The company said it had bought back and subsequently cancelled 3.8 million shares for a total of 145 million euros by end-2012 as part of 400 million euro share buyback announced in June.

Adecco said revenue fell to 5.027 billion euros from 5.194 billion year-ago, in line with estimates, with a fourth-quarter drop of 18 per cent year-on-year in France and double-digit falls in Spain and Italy.

“France for us is predominantly industrial business, less professional, and industry is under pressure. France from an output point of view is more challenged than other European countries,” finance chief Dominik de Daniel said.

Temporary placements in information technology and more hiring in the public sector helped lift revenues in Britain and Ireland by 6 per cent, despite weak hiring in banking and finance.

Adecco said revenues were beginning to stabilise into the new year, partly thanks to solid growth in emerging markets and in North America, where the IT professional staffing business grew by 12 per cent in 2012.

De Daniel said the company appeared to have resumed its long-term sequential trend growth -adjusting for a very strong first quarter in 2012 -after undershooting in the last six quarters largely due to the recession in Europe.

“It is a first early indicator that things are stabilising, but not more than that,” de Daniel said.

Dutch rival Randstad said in mid-February that sales per working day fell by 5.2 per cent in January after a 5.6 per cent decline in the fourth quarter and took an impairment on its British.


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