The Adecco Group (ADEN:VTX), reported revenue of €5.49 billion during the fourth quarter ended 31 December 2021, an increase of 1% organically and trading days adjusted.

By geography, Adecco Southern Europe & EEMENA saw growth of 6% on a trading days adjusted basis. Modis reported a revenue increase of 14% on an organic basis and trading days adjusted.

Permanent Placement was up 69% organically, while Outsourcing, Consulting & Other Services was up 16 percent and Training, Upskilling and Reskilling was up 15% on an organic basis. Strength across these services lines was offset by the counter-cyclical Career Transition services, which were 39% lower organically and Flexible Placement services, which were 1% lower on an organic basis.

Adecco's fourth quarter revenue was in line with analyst forecasts, according to Reuters.

The Group generated an operating income of €191 million, 15% lower, mainly owing to higher levels of one-off costs.

Alain Dehaze, Adecco Group CEO, said, “Good progress has been made in the first year of implementation of our Future@Work strategy. We have established all three GBUs as Global Leaders, and accelerated our pivot to higher value services, as evidenced by this year’s record gross margin level.”

“At the GBU (Global Business Unit) level, Modis delivered outstanding performance in 2021, with strong top line growth and margin uplift, providing a strong foundation for the upcoming integration of AKKA. In LHH, Recruitment Solutions excelled, taking market share in permanent recruitment, while Career Transition navigated lower demand for their services,” Dehaze added.

Recovery in the Adecco business unit gathered pace with revenues up around 4% on a sequential basis. Against 2019, revenue is ahead across Southern Europe, Latin America and APAC.

On a year-on-year basis, revenue development was strong in APAC and solid in France and Southern Europe & EEMENA. These positive developments were countered by lower revenue contributions from Northern Europe, DACH and the Americas.

Revenue by geography

Unless otherwise noted, all growth rates in this section refer to the same period in the prior year, with revenues stated on an organic and trading days adjusted basis.

In Adecco France, solid revenue growth reflected recovery momentum, with strength across food & beverage, hotel & catering, and logistics & transportation, partially mitigated by a subdued autos sector.

Within Adecco Northern Europe, revenues from UK & Ireland were 28% lower, in light of a tough comparison period from exceptional contract wins in the prior period. In Benelux, revenues were 5% lower, while in the Nordics, revenues rose by 10%, with improvement centred around manufacturing, food & beverage, and professional services.

In Adecco DACH, Switzerland & Austria grew 3%, while revenues in Germany were 7% lower, mainly due to a subdued autos sector. Performance also reflects a tough comparison in logistics.

Across Adecco Southern Europe & EEMENA, the group reported solid revenue growth reflected strength in Italy, where revenues increased 18%. In Iberia, revenues were 2% lower and in EEMENA, 13% lower. Growth was driven by strong demand in manufacturing, consulting, and food & beverage, partly mitigated by a subdued autos sector and a tough comparison in logistics, mainly in Iberia and EEMENA.

Across Adecco Americas, in Latin America, revenues were 4% lower, due to legislative change in Mexico having a negative impact. At the same time, revenues grew in double digit terms excluding Mexico.

In North America, revenues were 9% lower. The Adecco US result was sequentially stable, with year-on-year developments hindered by lower activity in flexible placement related to legacy sector exposures and candidate scarcity for lower wage blue-collar roles. The group strengthened US leadership through the appointment of Eileen Sweeney as Head of Adecco US. Sweeney is responsible for ensuring the operating model put in place during 2021 delivers intended performance improvement. Turnaround continues, with a focus on sales discipline, sector repositioning and maximising the effectiveness of the Career Centre.

In Adecco APAC, the region reported broad-based growth with revenues up 24% in Australia & New Zealand, up 11% in Asia and up 8% in Japan.

In LHH (Talent Solutions) revenue benefited from excellent growth in Global Recruitment Solutions, up 22%, and US Recruitment Solutions, up 17%. Gross profits in the Recruitment Solutions segments combined rose by over 35%.

Pontoon’s revenues were up 8%, led by MSP and RXO. Career Transition & Talent Development revenues were 25% lower, with the strong global economy reducing demand for Career Transition services, somewhat countered by accelerating momentum in Talent Development. General Assembly revenues were 20% lower, with demand for their services impacted by the spread of Omicron. Both digital platforms, Hired and Ezra, advanced strongly.

Within Modis, by region, the Americas were up 24%, EMEA was up 8% and APAC up 8%.

Revenue by service line

Flexible placement activities saw strong growth in healthcare and robust demand in manufacturing, while facing a tough comparison in logistics and continued headwinds in autos.

Permanent placement revenues, up over 70% on a reported basis, were a highlight across the business, while Other Services, which includes training and outsourcing solutions, rose over 20%.

For the full year 2021, Adecco Group reported 20.94, up 9% on an organic and trading days adjusted basis. Gross profits were up 15% organically, supported by a gradual lessening of Covid-19 restrictions and strong revival in trading conditions.

On 24 February, the Adecco Group announced it had acquired 59.91% of the shares issued by AKKA Technologies from the Ricci Family Group and SWILUX S.A., bringing its total holding to 64.72%. Modis, the group’s high-tech services business, will be combined with AKKA.

“Akkodis has been announced as the future global brand for the combined business, leveraging the existing value of both brands and providing a clear, distinct brand proposition to customers and colleagues that will amplify future business development,” the group stated.

During 2021, the group focused on protecting profitability, through agile cost management and commercial discipline. As the pandemic eased in the second half of 2021, the group accelerated investment in a focused and disciplined way to improve growth momentum.

“Adecco delivered sector-leading profitability through 2021, while continued investment supported improved sequential revenue momentum in the last quarter,” Dehaze said. “Looking ahead, while recognising ongoing pandemic related challenges, we expect healthy demand for the group’s services in 2022, and are investing to accelerate sustainable, profitable growth.”

For 2022, macro-economic indicators point to robust economic growth, despite geopolitical uncertainty and lingering pandemic related challenges, according to the firm.

Furthermore, Adecco said it does not expect Russia's invasion of Ukraine to derail the global economic upswing and increased hiring by companies.

The group, which has no business in Ukraine or Russia, expects the economic fallout to be contained within the region, Chief Financial Officer Coram Williams said.

What is happening is terrible, but I don't think it's going to have a major impact on the markets we operate in and the global economy in the longer term," Williams told Reuters. “Forecasts for the global economy are very robust and that’s what underpins our guidance.”

In Q1 2022, the group expects solid revenue growth on a year-on-year basis, with modest sequential improvement. The group’s margin will reflect continued investment, particularly in Adecco, that is anticipated to accelerate sustainable, profitable growth.

Shares in Adecco Group last traded at CHF 44.71 (€43.27), down 2.42% on the day and 6.83% above its 52-week low of CHF 41.85 (€40.50), set on 28 January 2022. The company has a market cap of CHF 7.67 billion (€7.42 billion).