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Adecco Q4 organic revenue growth slows

March 13 2013

Fourth-quarter revenue growth slowed at Adecco SA, and gross margin narrowed by 10 basis points. The world’s largest staffing firm reported revenue fell 3 percent, or 6 percent on an organic basis, to €5.03 billion (US$6.64 billion) when compared to the same quarter in the previous year.

The 6 percent organic decline compares to a year-over-year increase of 3 percent on an organic basis in the fourth quarter of 2011 and an increase of 17 percent on an organic basis in the fourth quarter of 2010.

Organic growth excludes the effects of currency as well as acquisitions and divestitures.

Revenue fell on an organic basis across many of the company’s geographic markets in the fourth quarter of 2012. Europe remained challenging for the firm, especially France where revenue fell 17 percent on an organic basis. France represents Adecco’s largest single market with fourth-quarter revenue of €1.21 billion (US$1.60 billion).

Other parts of Southern Europe as well as Japan also proved particularly difficult. Revenue in Italy fell 8 percent on an organic basis while Iberian revenue fell 10 percent organically. Japan fourth-quarter revenue fell 15 percent on an organic basis.

North America revenue fared better, revenue rose 8 percent on an organic basis in Q4 to €947.0 million (US$1.25 billion). Adecco reported U.S. information technology staffing revenue rose 16 percent on an organic basis in the fourth quarter. Professional staffing revenue rose 8 percent in the fourth quarter on an organic basis in North America, and permanent placement revenue rose 12 percent organically.

Global industrial staffing revenue fell 8 percent to €2.40 billion (US$3.18 billion) in the fourth quarter, and office/clerical revenue fell 6 percent to €1.36 billion (US$1.80 billion). The decreases were not on an organic basis.

Gross margin fell to 17.8 percent in the fourth quarter from 17.9 percent in the year-ago quarter.

Adecco reported restructuring and integration costs of €46.0 million (US$60.8 million) in the fourth quarter. Of that amount, €33.0 million related to France and €9.0 million related to other European countries. In addition, consolidation of several data centers in North America represented €4 million in restructuring costs.

Fourth-quarter net income fell 74 percent to €35.0 million (US$46.3 million).

Revenue in the first two months of 2013 was down 5 percent on an organic basis and adjusted for business days, the company reported in a conference call with analysts.

CEO Patrick De Maeseneire also said in a conference call said he sees possible opportunity under the Affordable Care Act in the U.S.  as staffing buyers may turn to staffing firms to stay under the 50 full-time equivalent threshold when employer penalties take effect. In addition, only a small number of Adecco employees will be impacted under the act, he said.

Adecco SA
 For the fourth quarter ended Dec. 31, 2012, compared with the same period in the previous year.
 Revenue: €5.03 billion (US$6.64 billion), -3 percent
 Net income: €35.0 million (US$46.3 million), -74 percent

For the full year ended Dec. 31, 2012, compared with the previous year.
Revenue: €20.54 billion (US$27.14 billion), 0 percent
Net income: €378.0 million (US$499.5 million), -27 percent

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