The Adecco Group (ADEN:VTX), reported revenue of €6.21 billion during the fourth quarter ended 31 December 2022, an increase of 5% organically and trading days adjusted.

The group reported growth in all of its global business units.

Denis Machuel, Adecco Group CEO, said, “The group had a strong finish to 2022 as we continued to drive momentum from our investment plan. We achieved excellent growth in Q4, with Adecco significantly outpacing the market. The newly combined Akkodis business performed well, over-delivering on its synergy target for 2022 and tracking on target for synergy capture for 2023. In LHH, our digital coaching business, Ezra, posted strong growth, and our Career Transition business delivered excellent results as the team successfully captures increasing demand amidst an uptick in corporate restructuring driven by the US technology sector.”

According to Reuters, the group’s revenue beat the €6.1 billion expected in a company gathered consensus of forecasts. However, net profit fell 65% to €65 million, missing forecasts as the company expanded its own workforce by 14% to 39,364 people and incurred interest and other expenses.

The net income result reflects lower income from operations, interest expense of €15 million, and other income/(expenses), net of €21 million.

The Adecco Group’s gross margin improvement to 21.0% was supported by its portfolio shift, positive mix, and pricing.

EBITA excluding one-offs was €228 million, compared to €259 million in the prior period.

The group also reported operating income €113 million, down 41% over the year, reflecting higher amortisation and one-offs, both relating to the AKKA acquisition.

The AKKA integration has progressed well, according to the group. In 2022, approximately €25 million of synergies were realised, mainly from reduced overheads such as real estate, as well as from project wins.

Revenue by geography

Unless otherwise noted, all growth rates below refer to same period in prior year, and on an organic and trading days adjusted basis.

In France, the group said it outperformed the market, supported by excellent performance in QAPA as well as Onsite. In sector terms, healthcare, autos, and manufacturing were strong, while logistics was soft.

Revenues from UK & Ireland were 3% higher, with strong growth in finance and services, partly mitigated by subdued activity in logistics. In the Nordics, revenues were up 2%, led by Finland, while in Benelux, revenues were up 3%.

Within DACH, Germany recorded growth of 24%, showing strong return on investment. Growth was broad-based but benefited particularly from autos, professional services and logistics strength. Switzerland & Austria grew 11%.

Across Southern Europe and MENA, the group saw moderate revenue growth in Italy, up 2% on a tough comparison period, while growth in Iberia and EEMENA was stronger, at 5% and 7% respectively. Manufacturing, Food & Beverage and consulting sectors developed favourably while logistics was soft.

In the Americas, Latin America revenues were up 21%, led by Argentina and Mexico, with the segment gaining share. In North America, revenues were 13% lower. Revenues in the US were challenged, reflecting compressed peak season demand. At the same time, relative performance trended positively, and operational green shoots were strengthened, for example with improved sales intensity and fill rates, and lowered voluntary turnover.

In Adecco APAC, the region reported very strong revenue growth of 14%. Japan, Asia and India all recorded excellent revenue growth; 20% in Japan, and 19% in both Asia and India. This strength was partly mitigated by performance in Australia & New Zealand, where revenues were 11% lower, weighed by the end of a large government contract. End-market growth was broad-based, led by IT Tech and retail.

In LHH, Recruitment Solutions revenues were 7% lower, reflecting a tough comparison and market deceleration in the US. However, Career Transition & Mobility revenues were up 19%, driven by major project wins in the US, focused on the tech sector. Learning & Development revenues were flat, with Ezra up 40%. In Pontoon & Other, MSP and RPO, revenue combined, grew 8%. Hired’s revenue growth was tempered by the downturn in the US tech sector.

Akkodis delivered revenue growth of 6% in the quarter. On a segment basis, Modis APAC grew 9%, supported by expansion in engineers and very high utilisation levels. Americas grew 7%. Consulting activities grew notably well.

Modis EMEA was up 3%, with solid growth in both France and Germany. While Akkodis’ growth in Germany was solid this quarter, actions to hasten Germany’s pivot to Smart Industry, including by improving the efficiency of its organisational structure, were put in motion during the quarter. Consequently, onetime restructuring charges of approximately €29 million were recorded by the group. AKKA contributed €437 million of revenues in the period and, on a stand-alone basis, grew in line with the legacy Modis business. Growth in Data Respons and from AKKA France was strong.

For the full year period, Adecco Group reported revenue of €23.64 billion, an increase of 13% and up 5% on an organic, trading-days adjusted basis. The growth was supported by healthy trading conditions.

The Adecco Group also announced that, in January 2023, the group appointed with immediate effect, Ian Lee as President, Geographic Regions. This newly created role ensures local perspectives are represented at the Executive Committee level. Lee has been with Adecco Group since 2017 and will continue to serve as President of Adecco APAC.

Looking ahead, the group’s December exit rate was strong at around 6%, however, volumes in January have softened. According to Reuters, Adecco said its hiring activity had weakened modestly at the start of 2023.

We have seen a slowdown between December and January, but it is modest," Chief Financial Officer Coram Williams told Reuters, declining to give a figure. "The business is still growing, we are gaining market share. There is more macroeconomic uncertainty out there, but the talent market is very dynamic."

The group said it is well positioned to capture market share opportunities in a rapid and agile manner. In the first quarter, the group expects both gross margin and SG&A expenses (excluding one-offs) to be broadly in line with Q4 2022’s levels, in a seasonally lower margin quarter.

Adecco Group shares last traded at CHF 33.96 (€34.13), down 1.45% on the day and 28.73% above the 52-week low of CHF 26.38 (€26.51) set on 10 October 2022. The company has a market cap of CHF 5.81 billion (€5.83 billion).