The Adecco Group (ADEN: VTX) reported first quarter revenue today of €4.97 billion, an organic increase of 1%, or 2% trading days adjusted (TDA), when compared to the same period last year.

Revenue was down 3% year-on-year on a reported basis. Currency movements and divestments had a negative impact on revenues of approximately 3.5% and 0.5% respectively, while the number of working days had a negative impact of approximately 1%.

The year-on-year revenue trend improved through the quarter, influenced by the impact of Covid-19 lockdowns on the prior year comparison base, with January and February 2021 combined down 2% and March up 9% Trading Days Adjusted.

When compared to Q1 2019, revenues in Q1 2021 were still 8% lower suggesting the market still has some way to go to recover from the global pandemic.

Revenue growth was driven by a strong performance in Southern Europe & EEMENA (Eastern Europe and Middle East and North Africa), and stabilisation in the majority of other regions.

By Global Business Unit (GBU) revenue in Adecco was up 2%, Talent Solutions was flat, while Modis revenues were down 3%, all compared to the prior year on an organic basis and trading days adjusted.

By service line, flexible placement revenue was flat year-on-year organically, at €4.08 billion; permanent placement revenues declined by 11% to €117 million; revenue from career transition was €94 million, up 4%; revenues in training, upskilling & reskilling were up 28%, to €79 million, and outsourcing, consulting & other services was €593 million, up 7%.

Adecco Group generated an operating income in Q1 2021 of €182 million and net income attributable to Adecco Group shareholders of €124 million. This was compared to an operating loss of €247 million and a net loss of €348 million, driven by the goodwill impairment.

“The group had a robust start to 2021, showing continued resilience and sector-leading profitability,” Alain Dehaze, Chief Executive Officer, Adecco Group, said. “Despite the ongoing challenges from Covid-19, we returned to modest revenue growth, and several businesses are now back above 2019 levels. Positive mix development, pricing and cost discipline drove broad-based margin improvement. With our diversified portfolio of services we support our clients and candidates with the solutions they need to adapt to the future of work. As an essential service provider, we have an important role to play in helping society successfully exit from the current crisis, supporting a recovery in employment and a safe return to work for all.”

Rival staffing firms Randstad and ManpowerGroup recently published their first-quarter results, also reporting organic improvements in revenue (+6.4% and 1% respectively).

Earlier this year, the Adecco Group unveiled its Future@Work strategy. This strategy included the alignment of its business and the creation of three distinct Global Business Units (GBUs): Adecco, Talent Solutions, and Modis.

Revenue by Geography and Global Business Unit

All revenue growth rates stated below are on a year-on-year and organic basis, unless otherwise stated.

In Adecco, total revenue was €4.00 billion, up 2% year-on-year. Growth was driven by Southern Europe & EEMENA, with most other regions flat year-on-year and APAC slightly lower.

In Adecco France, revenue was flat when compared to the prior year. Growth in logistics and transportation was offset by challenges in automotive and retail.

In Adecco Northern Europe revenue was flat when compared to the prior year. Revenue performance varied across the region. UK & Ireland grew by 13%, driven by strength in logistics and e-commerce. Revenue in Benelux declined by 12%, and the Nordics declined by 8%.

Adecco DACH revenue was €341 million, flat year-on-year. Germany grew by 1%, while Switzerland & Austria declined by 4%. Double-digit growth in logistics and public sector clients was offset by lower demand from automotive, aerospace and retail.

Adecco Southern Europe & EEMENA revenue was up 13%. Revenue in Italy was up 21%, Iberia was up 3% and EEMENA grew by 9%. Growth was driven by higher demand from logistics and manufacturing clients.

Adecco Americas revenue was flat year-on-year. Strong growth in Latin America, up 23%, was offset by declines in North America, down 9%. The recovery in North America was held back by lower exposure to the more dynamic areas of the economy, such as logistics and transportation, and reduced demand in automotive.

Adecco APAC revenue was down 2%. Revenue growth remained solid in Japan, up 3%, while Australia & New Zealand was up 2%. Asia decreased by 1%. India declined by 38%, linked to the exit of certain lower-margin activities in 2020.

In Talent Solutions, revenue was flat year-on-year. LHH (Lee Hecht Harrison) grew organically by 7%. Lower activity in counter-cyclical career transition in the US, linked to the improving economy, was partly offset by stronger demand in Europe and an acceleration in talent development activities globally.

Reskillling specialist General Assembly was up 1% organically, driven by strong demand in B2B. The group said US Professional Recruitment revenues were flat compared to the prior year, with improving momentum through the quarter, particularly in permanent placement. Global Professional Recruitment revenue was down 6%. Total talent solutions brand Pontoon declined by 4%, driven by lower revenues in lower-margin direct sourcing activities, with growth in MSP and RPO.

Modis was more resilient than other units during the early part of the Covid-19 crisis and hence did not benefit from easier year-on-year comparables in Q1 2021. Revenue declined by 4% in the Americas and by 9% in EMEA but grew by 3% in APAC. Technology consulting activities continued to grow, up 5% year-on-year, mitigating the impact of lower revenues in flexible placement, down 12%.

Looking ahead, Dehaze said, “We are encouraged to see continued recovery, though we are mindful of uncertainties related to Covid-19 and the economic environment. Our unparalleled service range, operational agility and strong financial position provide a platform for generating long-term value for all our stakeholders, and delivering on our ambitious financial targets over the medium term. While the economic recovery may remain uneven, we will continue to implement our strategy with one clear objective: to make the future work for everyone.”

Following the revenue improvement of 9% in March 2021, volumes in April indicate a return to gradual sequential improvement, as vaccination campaigns accelerate and Covid-19 restrictions are gradually lifted. As a result, The Adecco Group management expects a bounce back in revenues in Q2 2021, supported by the weak prior year comparison base. At the same time, Covid-19 related and economic uncertainties remain elevated.

“The group will continue to invest in areas of growth and its Future@Work transformation, with a focus on driving strong productivity and operating leverage from the return to revenue growth. The group aims to achieve a drop-down ratio of approximately 50% (conversion of incremental gross profit into incremental EBITA) in the early phase of revenue recovery,” the group stated.

Shares in Adecco Group last traded at CHF 59.76 (€54.38), down 4.17% on the day and 10.86% below its 52-week high of CHF 67.04 (€61.00), set on 9 April 2021. The company has a market cap of CHF 10.18 billion (€9.26 billion).