The Adecco Group (ADEN:VTX), reported revenue of €5.40 billion during the fourth quarter ended 31 December 2020, a decrease of 5% organically and trading days adjusted.

Japan and the Rest of World region returned to growth, while Europe and North America continued to recover.

The 5% decrease was an improvement over the 15% decrease in the third quarter of 2020 (organic and trading days adjusted). It also marks a strong rebound from the 28% decline of Q2 2020.

“The improved revenue trend reflected the group’s resilient and diverse services portfolio, despite the lockdowns impacting several major markets in Q4 2020,” the company stated.

By service line, temporary staffing revenues declined by 5% to €4,655 million; permanent placement revenues were down 25% to €96 million; revenues from career transition increased 19% to €102 million; and revenues in outsourcing and other activities declined 1% to €553 million.

Net income was down 42% which, according to Reuters, beat market forecasts of €116 million.

The year-on-year decline in reported net income was primarily driven by the favourable impact from the gain on sale relating to the divestment of Soliant in Q4 2019.

Staffing rivals Randstad and ManpowerGroup reported their results earlier this year. Both reported continuing recovery (Q4 2020 revenue declines of 3.6% and 3% respectively).

Revenue by geography

All revenue growth rates in this section are year-on-year on an organic basis, unless otherwise stated.

In France, the decline continued to be driven by lower demand from clients in the manufacturing, automotive and construction sectors while logistics, healthcare, pharmaceuticals, and utilities grew. Revenue decreased by 9% in Workforce Solutions (Adecco brand), which accounts for over 90% of revenues. Professional Solutions were down 16%. Permanent placement revenue declined 22%.

North America General Staffing was down 5%, led by lower demand primarily from clients in the manufacturing and financial services sectors. UK & Ireland General Staffing was up 32%, driven by very strong demand from e-commerce clients. Permanent placement revenue grew by 10% in North America General Staffing and declined by 58% in UK & Ireland General Staffing, with further Covid-19 lockdowns impacting client and candidate confidence.

North America Professional Staffing declined 14%, with reduced revenue declines in the professional recruitment brands (Finance, Office, Legal) driving the improvement compared to Q3 2020. UK & Ireland Professional Staffing declined 34%, similar to the prior quarter, with a continuing impact of regulatory changes (IR35). Permanent placement revenue was down 26% in North America Professional Staffing and down 24% in UK & Ireland Professional Staffing.

In Germany & Austria, revenue declined by 6%, or 10% Trading Days Adjusted (TDA). The decline was driven mostly by lower demand from clients in the automotive, manufacturing and aerospace industries, partly offset by strong growth in e-commerce and logistics. In Switzerland, revenue declined by 14%.

In the Nordics, revenues declined 20%, or 21% TDA, led by Sweden. Revenue in Benelux was down 17%, or 18% TDA, with the Netherlands down 22%, or 24% TDA, and Belgium down 13%, or 14% TDA. The declines were driven by lower demand in the manufacturing, automotive, retail and logistics sectors.

In Italy, revenue growth of 9% was led by the manufacturing and logistics industries. However, permanent placement was down 4%.

Japan saw continued growth in both Workforce Solutions and Professional Solutions. Permanent placement was down 34%.

In Iberia, revenue was driven by growth in the logistics, retail and manufacturing industries.

Revenue decreased by 2% in Australia & New Zealand, by 8% in Asia and by 41% in India, while it grew by 7% in Eastern Europe & MENA and by 23% in Latin America, all trading days adjusted.

In Career Transition and Talent Development revenue was up 9%. In Lee Hecht Harrison, revenue grew by 16%, while it declined by 14% in General Assembly. Growth in LHH’s counter-cyclical Career Transition activities accelerated during the year, as client restructuring activity increased as a result of the crisis. While General Assembly has seen strong demand for its online offerings, it continues to be impacted by the temporary closure of its campuses globally, linked to Covid-19.

As of 1 January 2021, the group has a different reporting structure comprising three reporting brands. The Workforce Solutions brand includes Adecco. The Professional Solutions brand includes Modis, Badenoch + Clark / Spring Professional and other local recruitment brands, and Other Professional Brands. The Talent Solutions and Ventures brand includes LHH, Pontoon and Ventures.

Revenue by brand

Full year revenue

The Adecco Group also reported full year revenue of €19.56 billion in 2020, down 14% organically and Trading Days Adjusted.

Alain Dehaze, Group CEO said, “Despite the difficult market environment in 2020, financial performance remained resilient. After a sharp drop in Q2, we saw a consistent recovery in revenues through the second half of the year, as companies and individuals adapted to the new reality. We successfully pivoted towards growth areas, seeing more than 40% growth in e-commerce and logistics. Our digital capabilities and Onsite solutions contributed to market share gains across many geographies. As an essential service provider, we are playing an important role to support companies and individuals navigate the workforce transitions that have been accelerated by the crisis.”

“The group remained solidly profitable, with an EBITA margin that was higher than during previous economic downturns, supported by our balanced portfolio, benefits from GrowTogether, and agile cost management. A rigorous focus on cash collection and our prudent capital structure helped maintain strong liquidity and a healthy cash flow and balance sheet. This allowed us to sustain important investments in IT and digital, and to uphold our dividend commitment,” Dehaze continued.

“Throughout the crisis we remained focused on our strategic priorities – perform, transform and innovate. In December, we launched our new strategy – Future@Work – building on the progress of the last strategic cycle and which is underpinned by our clear purpose, as one of the world’s largest employers, to make the future work for everyone,” Dehaze said.

The group also announced yesterday that it plans to move its North American headquarters to Atlanta, Georgia from Jacksonville, Florida.

Management Outlook

While revenue declined by 5% in Q4 2020, organically and trading days adjusted, it saw improvement through the quarter, with December down 2% TDA. Revenue in January 2021 was also down 2% year-on-year, organically and TDA, and volume trends in February indicate a similar trend.

Expanded Covid-19 lockdowns across much of Europe in early 2021 have not materially impacted demand for the group’s services to date, albeit sequential improvement has slowed and economic uncertainty remains high, the company said.

Chief Financial Officer Coram Williams told Reuters the company sees only a "limited risk" of a new hiring downturn triggered by the latest wave of Covid-19 restrictions.

"It's not that we will see a significant risk of going backwards, but we will only see further improvement once the restrictions start to abate," Williams said.

The group said it will continue to manage its cost base with agility, while maintaining investments in its transformation and in areas of growth. Shares in Adecco Group last traded at CHF 60.60 (€54.77), up 1.51% on the day and 0.98% below its 52-week high of CHF 61.20 (€55.32), set on 8 January 2021. The company has a market cap of CHF 9.76 billion (€8.82 billion).