The Adecco Group (ADEN:VTX), reported revenue today of €5.99 billion for the second quarter ended 30 June 2023. Revenue was up 3% organically and up 4% on an organic and trading days adjusted (TDA) basis.

Denis Machuel, Adecco Group CEO, said, “The group delivered another quarter of revenue acceleration and market share gain. The Adecco business achieved growth across all regions at a level that continued to outpace its competitors, and with underlying margin improvement.”

Adecco has managed to outperform its closest peers this quarter. Rival Randstad last month reported organic revenue per working day fell by 5.1% in Q2 2023 citing challenging market conditions. ManpowerGroup also cited a challenging environment, reporting second quarter revenue fell 3.5% year over year in constant currency to $4.86 billion.

According to Reuters, revenue for the Adecco Group was slightly ahead of forecasts for €5.98 billion in a company-gathered consensus of forecasts. However, the company reported net income of €62 million, down 19% over the year and below forecasts of €80 million, per Reuters.

“It’s true, the overall macro-economic situation is not the best,” Adecco CEO Denis Machuel told Reuters. “We see some indications of slowing down. We are seeing companies being more cautious when it comes to permanent hiring, candidates are also being more cautious. When it’s cold outside, you tend to stay home.”

Chief Financial Officer Coram Williams said hiring levels were ‘very modestly down’.

EBITA excluding one-offs was €184 million, compared to €205 million in the prior year period. The group generated an operating income of €117 million, flat in constant currency terms.

Net income attributable to Adecco Group shareholders was €62 million, compared to €77 million in the prior year period. The result reflects interest expense of €20 million, and other income/(expenses), net of €9 million.

Revenue by segment

Unless otherwise noted, all growth rates below refer to the same period in the prior year, with revenues stated on an organic and TDA basis

In France, revenue growth was supported by the autos and healthcare sectors, while logistics, construction and retail were soft. Growth was strong in permanent placement, and robust in flexible placement.

In Northern Europe, revenues from UK & Ireland were up 7%, with growth led by autos and public sector activity. Revenues were 1% lower in the Nordics, with new construction regulations constraining activity. In the Benelux, revenues were down 1%. Overall, the region’s growth outpaced the market.

Within DACH, revenues in Germany were up 11%, outperforming the market. In Switzerland & Austria revenues were 1% higher, with Switzerland impacted by a tough market backdrop. Growth was generated mainly by autos, logistics and professional services.

In Southern Europe, revenue growth was strong, with Iberia up 11%, EEMENA up 19%, and Italy up 6%.

Latin America revenues grew by 22%. In North America, revenues were 7% lower, impacted by a tougher macro-economic environment. In Adecco US, revenue developments outperformed the market, and improved by 2% on a sequential basis.

In APAC, revenues were 12% higher in Japan, up 10% in Asia, and up 20% in India. Revenues in Australia & New Zealand were flat, weighed by the end of a large government contract.

Akkodis’ revenues were 1% lower (3% lower reported). Reflecting a sharp downturn in tech sector activity, staffing revenues were 25% lower. Consulting & solutions revenues were strong, growing by 12%.

“Akkodis delivered strong growth in consulting with excellent progress in the US; while the staffing side of the business was hindered by hiring contraction in the tech sector. Integration work and synergy capture is advancing smoothly,” Machuel said.

Revenue by service line

Revenues in LHH were flat (-3% reported) in the second quarter. However, by service line, growth was very strong in the counter-cyclical Career Transition segment where revenues doubled and where LHH is a market leader.

Machuel said, “In LHH, both the Career Transition and Ezra businesses delivered record quarters and profitability strengthened for the GBU (global business unit) overall.”

“Across the group we continue to drive productivity and cost discipline, with G&A (general and administrative) down in the quarter and delivery against the committed savings plan firmly on track,” Machuel said. “Looking ahead, while recognising a challenging macro-economic environment, we see positive momentum, driven by the strength of our unique portfolio and our relentless focus on performance.”

“We know there is a lot of uncertainty around, linked to the war in Ukraine, rising interest rates. But we think there is an opportunity to take market share,” Machuel told Reuters.

The group said it is on track to deliver its G&A savings plan of €150 million in run-rate terms by the end H1 2024. Of the targeted savings, approximately 75% will come from the introduction of a streamlined operating model. The remainder will come from the optimisation of shared functions and expense rationalisation. The group targets a year-end run-rate savings level of approximately €60 million.

Adecco Group exited the quarter with growth in line with Q2 levels, and volumes in July were resilient.

While macro-economic conditions remain challenging, the diversity of the group’s activities and geographic footprint provide continued opportunity for profitable growth and market share gain, the company stated. The group will manage its resources with agility, adapting to market dynamics, it added.

Adecco Group expects Q3’s gross margin to be around Q2 23 levels, while Selling General & Administrative expenses should be slightly lower on a sequential basis.

The Adecco Group also announced today the appointment of Caroline Basyn as chief digital and IT officer and member of the executive committee.

Basyn will join the Group on 28 August 2023. She is a seasoned international business and technology executive, with over 30 years’ leadership experience in digital transformation and leveraging technology innovations including as Chief Strategy & Transformation Officer Europe for PepsiCo. She is tasked with leading a Adecco’s combined digital and IT function and driving growth through digital and AI.

Adecco Group set a new 52-week high during today's trading session when it reached CHF 37.20 (€38.83). Over this period, the share price is up 15.94%. The company last traded at CHF 37.10 (€38.72), up 6.49% on the day. The company has a market cap of CHF 5.86 billion (€6.11 billion).