The Adecco Group ((ADEN:VTX), reported revenue of €5.99 billion in the third quarter ended 30 September 2018. Revenue growth was 2% on an organic basis and trading days adjusted.

The 2% growth was a slowdown from the 4% growth (trading days adjusted) achieved in Q2 2018. The deceleration was primarily due to lower growth in Europe.

Rivals Randstad and ManpowerGroup have already reported slowing revenue growth during their third quarter, reflecting greater caution among companies as economic growth slows.

Analysts at Swiss financial expert Vontobel said that Adecco’s third-quarter results "reveal a clear and broad slowdown in temp staffing across all major European markets."

Currency movements had a negative impact on revenue of approximately 1% year-on-year, while Mergers & Acquisitions had a positive impact of approximately 1%. Organic growth was broad-based across service lines, with the exception of the counter-cyclical career transition business.

Temporary staffing revenues increased by 1% to €5.2 billion, permanent placement revenues rose 19% organically to €145 million, career transition revenues were €80 million, down 6%, and outsourcing and other activities revenues grew 6% compared to the prior year, all on an organic basis. By business line, revenues were up 2% in General Staffing, up 1% in Professional Staffing, and up 3% in Solutions, all organically.

The year-on-year increase in net income was mainly attributable to non-recurring items: a gain-on-sale in Q3 2018 and a non-cash write-down of intangibles (trademarks) in Q3 2017. Net profit for Q3 also beat Reuters’ forecasts for €221 million euros as the company kept costs under control.

“As we communicated during our September investor seminar, trading in Q3 2018 was challenging, with growth slowing in a number of European markets,” Alain Dehaze, Chief Executive Officer, The Adecco Group, said. “Against this backdrop, overall the group delivered a solid performance.”

“Organic revenue growth was 2%, including improved performances in Japan and Rest of World, and another quarter of significant outperformance in France, our largest market,” DeHaze said. “Our businesses responded decisively to the slowdown in market growth, making the appropriate cost adjustments to protect our margin. And while ongoing strategic investments and the transformation of our German business impacted the headline EBITA margin, we made good progress in improving underlying profitability.”

In July, the Adecco Group entered into a definitive agreement to sell its remaining 43% ownership interest in Beeline. The transaction completed in August, resulting in a gain on sale of €113 million and cash proceeds of €226 million (before tax).

The sale brings total proceeds from the disposal of Beeline to more than €310 million (including payments received as part of the merger with IQN, in 2017) and was executed as part of the Adecco Group’s strategy to bring more focus and discipline to portfolio management. In the year ended 31 December 2017, and in the first six months of 2018, the Adecco Group did not recognise any earnings relating to its investment in Beeline.

Revenue by geography was broken down as follows.

Revenue in France was up 5% organically, year-on-year, delivering continued outperformance in a slowing market. Revenue increased by 5% in General Staffing, which accounts for over 90% of revenues, and grew by 8% in Professional Staffing. Revenue growth was broad based, and was driven by manufacturing and automotive. Permanent placement revenues were up strongly, growing 30%.

In North America, UK & Ireland General Staffing, revenue was €736 million, flat year-on-year. North America, which accounts for approximately 75% of segment revenues, was flat. Growth was impacted by volume reductions at a few large clients and improved towards the end of the quarter as new client wins ramped up. UK & Ireland represents approximately 25% of segment revenues and was down 1%, reflecting generally soft market conditions and a strong growth in the same period of the prior year. Permanent placement revenues were up 5% in North America and up 6% in UK & Ireland.

In North America, UK & Ireland Professional Staffing, revenue was down 2%. North America represents approximately 65% of revenues and was down 3%. Growth in Finance & Legal and Medical & Science was offset by a decline in IT and Engineering & Technical. UK & Ireland represents approximately 35% of revenues and was up 1%. Permanent placement revenues increased by 21% in North America and by 28% in UK & Ireland.

In Germany, Austria, Switzerland, revenue was €549 million, down 2%. In Germany & Austria, revenue was down 6%, driven by a slowdown in the market, impacted by weakness in the automotive sector and regulation changes, and the consolidation of the Adecco and Tuja general staffing businesses. In Switzerland, revenue growth was 10%, or 12% trading days adjusted.

In Benelux and Nordics, revenue was down 2% or down 3% trading days adjusted. Revenue in Benelux was down 5% or down 6% trading days adjusted. Growth slowed significantly in both the Netherlands and Belgium, due to softer market conditions and reduced demand at a few large clients. In the Nordics, revenue was up 2%, with double-digit growth in Norway partly offset by a low-single-digit decline in Sweden.

In Italy, revenue was up 6%, decelerating in-line with the market trend, after eight quarters of double-digit growth.

In Japan, revenue was up 4%, with growth continuing to be led by strong performances in professional staffing and permanent placement.

In Iberia, revenue was €281 million, down 1% or flat trading days adjusted, slowing in-line with the market trend.

In Rest of World, revenue was €683 million, up 6% organically or up 7% trading days adjusted. Revenue growth was 13% in Australia & New Zealand, 17% in Latin America, 7% in Eastern Europe & Middle East and North Africa, while Asia was down 2% and India was down 14%, all trading days adjusted.

In Career Transition and Talent Development (including Lee Hecht Harrison and General Assembly), revenue was €114 million, down 4% organically.

In its management outlook, the group said revenue growth in September and October combined was 1%, organically and trading days adjusted.

In France, the transition from CICE (tax credit for employment and competitiveness) to a new system of social charge reductions will result in no subsidies being paid for the month of December, according to the group. This will have a one-time negative impact on group gross margin of in Q4 2018, in addition to the continuing impact of the reduction of CICE from 7% to 6%, which has been effective since 1 January 2018.

Adecco also said its GrowTogether program will deliver the €50 million productivity savings target in 2018, on the way to €250 million in 2020.

As of last trade Adecco Group AG (ADEN:VTX) traded at CHF 50.00 (€43.60), up 4.10% on the day and 9.75% above its 52-week low of CHF 45.56 (€39.70), set on 25 October 2018. Based on its current share price the company has a market value of CHF 8.02 billion (€6.99 billion).