The Adecco Group (ADEN: VTX) reported revenue today of €5.70 billion for the third quarter ended 30 September 2024, a decrease of 5% on an organic and trading days adjusted basis.

On a reported basis, revenue fell by 4% over the previous year.

In a press release, Denis Machuel, Adecco Group CEO, said, “We continue to successfully deliver on our Simplify, Execute, Grow plan, and third quarter performance was robust, against a high comparison base. The macroeconomic environment remains challenging, but I am encouraged to see that volume trends have stabilised.”

Machuel added, “We made further G&A savings in the quarter, allowing us to lift the year-end run-rate. We have reprioritised our IT/digital plans to accelerate AI adoption and to expand Global Delivery to our top 25 customers. This will boost recruiter productivity and improve fill rates and time-to-fill, supporting profitable growth.”

According to Reuters, Adecco Group’s Q3 revenue fell short of forecasts, reaching €5.81 billion, according to a consensus of analysts gathered by the company.

Gross profit was €1.10 billion, 8% lower organically (9% reported), with the group achieving a gross margin of 19.4%, 90 basis points lower on a reported basis, reflecting lower volumes, current business mix and firm pricing.

SG&A expenses, excluding one-offs, were €925 million, 5% lower organically (6% reported). Average company-based Full-time Employees (“FTEs”) decreased by 6% versus the prior year period and 2% sequentially.

EBITA excluding one-offs was €186 million, 20% lower in constant currency (21% reported). The FESCO JV (joint venture) contributed €6 million in income, up from €4 million the previous year.

Revenue by segment

Adecco Group stated that the previous period’s results were adjusted to align with the current year’s presentation, specifically in how certain intercompany transactions are accounted for in segment revenue.

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.

Adecco delivered a resilient performance given challenging markets and a high comparison base. Revenues were 5% lower, or 3% organic (4% reported). Good results across Asia, Iberia, EEMENA and LatAm were outweighed by challenging markets, particularly in France and the US, the company added.

In Adecco France, revenue was 9% lower in a tougher market, weighed by economic and political uncertainties. In sector terms, logistics, manufacturing, and healthcare were notably pressured.

Within Adecco Northern Europe, Northern Europe revenue was 11% lower, with the UK & Ireland 15% lower, the Nordics 9% lower and Belux 2% lower, reflecting a tougher market environment. Consulting, construction, autos, and financial services were all challenging.

In Adecco DACH, revenue in Germany was 8% lower, while Switzerland was 6% lower, strongly outperforming the market. Manufacturing and logistics were subdued, with logistics and autos decelerating sequentially.

Across Adecco Southern Europe & EEMENA, revenue in Italy was 2% lower, while Iberia was up 6% and EEMENA up 6%. Logistics, retail and F&B (food and beverage) were strong, while autos were soft.

Latin America revenue grew 12% in the Adecco Americas segment, with most countries up double-digits. Retail and logistics were strong.

In North America, revenue was 15% lower, reflecting a continued downturn in flexible placement demand from Enterprise, including specific client impacts; revenues from SMEs grew moderately.

Adecco Group stated that management continues to focus on its turnaround, including through a branch revitalisation programme, MSP acceleration, further delayering, and near/offshoring to optimise cost-to-serve.

In Adecco APAC, revenue growth was solid, up 4%, with the region gaining market share. Japan was up 8%, Asia up 5%, and India up 14%. In Australia & New Zealand, revenue was 13% lower on a strong comparison base. The consulting, retail, and IT tech sectors were strong.

Akkodis’ performance reflects the ongoing downturn in tech staffing markets and a robust and above-market performance in Consulting & Solutions.

Within LHH, revenue was down on an organic, trading days adjusted basis in Recruitment Solutions (-10%), Career Transition & Mobility (-10%) and Learning & Development (-7%). Revenue was up 8% in Pontoon on an organic, trading days adjusted basis.

Revenue by service line

Q3 2023 was restated to conform to the current year’s presentation. For Permanent Placement and Outsourcing, Consulting and Other Services, the company stated that variance percentages were adjusted to exclude additional year-to-date reclassifications from the prior period. These adjustments were made to better reflect the underlying performance for the quarter.

Looking ahead, the Adecco Group said volumes are stabilising throughout Q3 and in October 2024.

For Q4 2024, the Adecco Group expects its revenues (year-on-year, organic TDA (trading days adjusted) basis), gross margin and SG&A expenses ratio to be similar to Q3 2024 outcomes, including seasonality.

Management is increasing G&A savings while protecting sales and delivery capacity to capture growth opportunities and market share. The group expects its year-end net debt to be similar to the prior year-end level.

Machuel told Reuters that the company expects the hiring market in the US to pick up following the presidential election, CEO Denis Machuel said on Tuesday, regardless of whether Kamala Harris or Donald Trump wins the White House.

Machuel said, “We remain focused on capturing market share, building on strong progress over the last two years, and have positioned resources to capture growth opportunities as the market recovers.”

Share price

Adecco Group set a new 52-week low during today’s trading session when it reached €24.06. Over this period, the share price is down 38.89%. The company last traded at €24.10, down 10.74% on the day. The company has a market cap of €4.53 billion.