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Switzerland — Adecco aims at 40% professional staffing revenues

14 April 2010

Adecco CEO, Patrick De Maeseneire, sees the future of the largest staffing services group worldwide in organic growth, a reduced cost base and increased involvement in professional staffing as opposed to general temporary staffing.

De Maeseneire told Swiss business daily Handelszeitung "we have drastically reduced our cost base. Don't forget that we have lost -30% of our revenues over the last two years i.e -6.3 billion Euro. We can only reach our goal of moderate growth with a better cost structure and a stronger positioning in professional staffing."

"We have already partly got there by acquiring Spring and MPS Group. The share of professional staffing in our portfolio is now 28%. In 2008 it was 17%. Margins are better in this area (professional staffing) but we also need general growth in revenues."

De Maeseneire went on to say "our focus lies in organic growth. We have made the acquisitions we wanted to make at the right time. Now we are excellently positioned in the market and we don't want to make any further large acquisitions over the next two years."

"In the long-term, I want us to concentrate on the health care sector because there will be enormous staff shortages in that area. We still have between 100 million Euro and 150 million Euro in the kitty, which we can use for smaller acquisitions. We would focus on emerging markets and additional services, which we don't yet provide or want to expand."

On the question of how Adecco revenues, which are greatly dependent on Gross Domestic Product (GDP), will fare in relation to the +1.5% predicted growth for European GDP in 2010, De Maeseneire said "we normally grow by twice to three times the percentage of the economy but this depends on the economic climate."

"In Germany, exports are up again and the car industry is growing. This is mainly due to exports to Asian countries but we are careful about H2 2010. We are going to wait until the end of the Summer to see what happens when the government's growth stimulation packages run out. In the short-term, we are not going to add to our [German] cost base."

"In the UK, we had negative revenue growth even during the good times. Something had to be done, and quickly. The acquisition of Spring increased our turnover by +450 million Pounds and an excellent management team came with it. The MPS acquisition gave us an extra 350 million Pounds of turnover. We are now the number one in Britain with roughly 1.7 billion Pounds worth of revenues, which is a size that enables you to make money in that very difficult market."

"In most countries, we have grown in-line with the market. In France, which is our largest market we have grown faster [than the market]. In Germany, Australia and Holland things went less well. We have concentrated on margins rather than on market share."

On the question of how prices were developing in the staffing industry, De Maeseneire commented "in the fourth quarter of 2009 our gross margin was 17.4%, exactly the same as in the third quarter. As expected and as is normal for the current economic cycle, we can feel pressure on prices. Apparently, this pressure on prices will reduce from the Summer 2010 onwards."

De Maeseneire also commented on his long-term vision for Adecco. He said "our company needs continuity. It is one of my personal aims to build up my successor from within the company. I would like 40% of our revenues to come from professional staffing and I want to reduce our rate of staffing fluctuation. In the UK we had 70% fluctuation at one point. I always say that managers who lose personnel should feel bad about themselves and look at themselves in the mirror. People work for these managers and they leave when these managers are bad."



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