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Adecco profit up 40%, but North American revenue falls

November 02 2007

Third quarter net income rose 40% at Adecco SA, despite weaker demand in the U.S. and Canada. The Swiss-based staffing giant posted a profit of euro230.0 million (US$328.3 million) in the third quarter, compared with euro164.0 million in the same period last year.

Profit was helped by a gain of 12 million euros from the change in the calculation of French social security contributions and 28 million euros from lower income taxes in France and Germany.

Adecco's third-quarter revenue rose 2% to euro5.44 billion (US$7.77 billion) from euro5.33 billion in the same period last year. Gross margin improved to 18.5% from 17.2%.

"We continue to see solid growth rates in the European and Asian staffing markets, while demand in the U.S. remains weak," said CEO Dieter Scheiff. "Given our value-based management approach, we expect to continue to see growth rates below the market in France."

U.S. and Canadian third-quarter revenue fell 13% to euro806.0 million (US$1.15 billion) from euro926.0 million in the third quarter of 2006. Adecco said the decline was most significant in its industrial business while only moderate in its office business. Industrial revenue fell 15% in constant currency in the U.S. and Canada.

Adecco also said information technology staffing revenue fell in the U.S. and Canada, and there was declining business in its finance and legal segment.

Third-quarter operating income in the U.S. and Canada fell 4% to euro39.0 million (US$55.7 million) from euro41.0 million.

Adecco said it anticipates the U.S. and Canadian market to remain weak for the rest of the year with growth in Europe and good demand in Japan. It also expects below-market growth in France.

Adecco acquired German staffing firm Tuja Group in the third quarter, and it bought 15.7% of Deutscher Industrie Servie AG (DIS), another German firm, that it did not already own. In the U.S., Adecco bought TalentTrack LLC, a Toledo OH recruitment process outsourcing firm.

Adecco said it was still committed to meeting its long-term goal of annual revenue growth of 7% to 9 %.

Shares of Adecco fell 0.84% in trading on the virt-x exchange to 70.50 Swiss francs.

Adecco SA

For the third quarter ended Sept. 30, 2007, compared with the same period in 2006

Revenue: euro5.44 billion (US$7.77 billion), +2%

Net income: euro230.0 million (US$328.3 million), +40%

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