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Adecco revenue up; European growth steady, North America activity increases

August 07, 2014

Adecco, the world’s largest staffing firm and the second-largest in the U.S., reported growth remained steady in Europe and activity picked up in North America. The Switzerland-based firm reported revenue rose 1 percent in the second quarter to €4.99 billion (US$6.80 billion). In constant currency, the increase was 5 percent.

Some of the fastest growth was in Iberia. Second-quarter revenue rose 21 percent to €196 million (US$267 million). Italy followed with 18 percent growth to €289 million (US$394 million).

In North America, revenue fell 3 percent in the second quarter to €927 million (US$1.27 billion). However, it rose 3 percent in constant currency. Adecco posted restructuring costs of €4 million in North America in the second quarter as it moved to a single headquarters.

Adecco’s BPO business line posted a 20 percent increase in revenue to €32 million (US$44 million) from €26 million in the year-ago quarter. BPO includes managed service programs revenue, recruitment process outsourcing revenue and vendor management systems revenue. On a constant currency basis, BPO revenue was up 26 percent.

Gross margin improved to 18.1 percent in the second quarter from 17.9 percent in the year-ago quarter.

Net income rose 15 percent to €145 million (US$198 million).

Quote

“In the second quarter our colleagues delivered another good performance. Revenue growth continued at a similar level to the first quarter. Growth remained steady in Europe, led once again by our industrial business, and as expected we saw a pick-up in activity in North America,” said CEO Patrick De Maeseneire. “We continue to be very focused on reaching our EBITA margin target of above 5.5 percent in 2015. Based on the good progress on our six strategic priorities, recent trends and continued favourable economic conditions expected going forward, we remain convinced we will achieve this target.”

Revenue

  Q2 2014 (€millions) Q2 2013 (€millions) % growth % constant currency Q2 2014 (USD$millions)
Revenue € 4,987 € 4,931 1% 5% $6,805

Revenue by segment

  Q2 2014 (€millions) Q2 2013 (€millions) % growth % constant currency Q2 2014 (USD$millions)
France € 1,201 € 1,205 0% 0% $1,639
North America € 927 € 960 -3% 3% $1,265
U.K. & Ireland € 502 € 469 7% 3% $685
Germany & Austria € 413 € 387 7% 7% $564
Japan € 259 € 283 -9% 2% $353
Italy € 289 € 244 18% 18% $394
Benelux € 240 € 222 8% 8% $327
Nordics € 216 € 214 1% 7% $295
Iberia € 196 € 163 21% 21% $267
Australia & New Zealand € 85 € 118 -28% -18% $116
Switzerland € 104 € 103 1% 0% $142
Emerging markets € 472 € 480 -2% 12% $644
Lee Hecht Harrison € 83 € 83 0% 5% $113

France*

  • Industrial revenue rose 2 percent (accounts for about 85 percent of revenue in France).
  • Office revenue fell 16 percent

North America*

  • Industrial revenue rose 10 percent.
  • Office revenue fell 5 percent driven by weak demand from financial services clients.
  • Professional staffing revenue rose 2 percent.
  • IT revenue rose 3 percent.
  • Finance & legal revenue up 5 percent.
  • Engineering & technical revenue fell 1 percent.
  • Medical & science revenue rose 6 percent.
  • Perm placement revenue rose 10 percent.

UK & Ireland*

  • Professional staffing rose 7 percent (two-thirds of U.K. and Ireland revenue).
  • IT revenue rose 9 percent.
  • Finance and legal revenue rose 3 percent.
  • Office revenue fell 3 percent.
  • Permanent placement revenue rose 13 percent.

Germany & Austria*

  • Industrial revenue rose by 11 percent (represents 70 percent of Germany and Austria revenue).

Japan*

  • Office revenue fell 1 percent (represents 75 percent of revenue in Japan).

Nordics*

  • Environment remains challenging in Norway but the revenue trend is improving.
  • Sweden negatively impacted by the timing of bank holidays.
  • Strong growth continues in Denmark.

Iberia*

  • Revenue driven by strengthening demand from export-oriented clients.

Australia & New Zealand*

  • Revenue still negatively impacted by client losses in the second half of 2013.

Lee Hecht Harrison*

  • Lower growth in North America, which accounts for approximately 50 percent of revenue.

*Growth rates are presented on an organic basis, which excludes the impact of currency, acquisitions and divestitures.

Revenue by business line

  Q2 2014 (€millions) Q2 2013 (€millions) % growth % constant currency Q2 2014 (USD$millions)
General staffing          
Office € 1,184 € 1,258 -6% 0% $1,616
Industrial € 2,559 € 2,420 6% 8% $3,492
           
Professional staffing          
Information technology € 577 € 567 2% 4% $787
Engineering & technical € 275 € 294 -6% -2% $375
Finance & legal € 189 € 188 0% 3% $258
Medical & science € 88 € 95 -8% -5% $120
           
Solutions          
Career Transition & Talent Development € 83 € 83 0% 5% $113
BPO (including MSP, RPO and VMS) € 32 € 26 20% 26% $44

Gross margin

  Q2 2014  Q2 2013 
Gross margin 18.1% 17.9%

Net income

  Q2 2014 (€millions) Q2 2013 (€millions) % growth Q2 2014 (USD$millions)
Net income € 145 € 126 16% $198

Share price and market cap

Adecco shares closed down 2.52 percent to 63.70 Swiss francs. The company has a market cap of 10.70 billion Swiss francs, according to Google.