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Adecco revenue falls 31%, makes Spring offer

August 11 2009

Staffing Industry Analysts North American Daily NewsAdecco SA, the world's largest staffing firm, reported second-quarter revenue fell 31.0% year over year to euro3.59 billion (US$5.04 billion). It also announced an offer of GBP108.0 million (US$179.4 million) for London-based staffing firm Spring Group PLC.

On a constant currency basis, Adecco's second-quarter revenue fell 32%.

Adecco's U.S. and Canadian operations posted a 19.1% year-over-year decline in second-quarter revenue to euro543.0 million (US$762.8 million). The decline was 29% in constant currency.

Adecco reported second-quarter revenue fell year over year at several of its U.S. and Canadian operations on a constant currency basis. Industrial staffing revenue in the U.S. and Canadian segment fell 41%, office staffing revenue fell 28%, information technology fell 24% and engineering and technical revenue fell 25%.

The company's second-quarter gross margin narrowed to 17.8% from 19.3% in the year-ago quarter.

Net loss for the second quarter was euro147.0 million (US$206.5 million) with Adecco recording an impairment charge of euro192.0 million (US$269.7 million). The charge includes euro125.0 million for impairment of goodwill at its German operations. Another euro61.0 million related to impairment of intangible assets in Germany and an additional euro6.0 million related to the discontinuation of its Alta Gestion brand in Spain and Portugal.

Adecco also reported a restructuring charge of euro54.0 million (US$75.9 million). The company cut internal employees by 6,800 from the second quarter of 2008 and reduced the number of branches by 900. Adecco still had 29,000 full-time equivalent internal employees and 5,800 branches in the second quarter of this year.

The company said it anticipates "no material pick-up of business activities" and plans further restructuring. It estimates euro40 million in restructuring costs for the second-half of 2009.

In addition to earnings, Adecco offered to acquire Spring Group for 62 pence in cash per share for total consideration of GBP108 million. The publicly traded Spring Group had sales of GBP516.5 (US$747.9 million) in 2008, including North American revenue of GBP54.1 million (US$78.3 million).

Adecco reported it would offer Spring Group CEO Peter Searle the position of country manager of the combined operations of Adecco UK and Ireland and Spring Group. Searle had served as chief executive of Adecco UK before joining Spring.

Separately, Spring today announced revenue of GBP224.2 million (US$370.5 million) for the first half of 2009, down 10.5% compared with the first half of last year.

Spring reported first-half U.S. professional staffing revenue of GBP23.5 million (US$38.7 million), down 2.5% year over year.

Adecco SA
For the second quarter ended June 30, 2009, compared with the same period in 2008.
Revenue: euro3.59 billion (US$5.04 billion), -31.0%
Net loss: euro147.0 million (US$206.5 million) vs. net income of euro214.0 million

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