UPDATE: Adecco Swings To Profit As US, France Job Markets Grow
March 03 2010 - 3:29AM
Dow Jones News
Adecco SA (ADEN.VX) Wednesday said it swung to a fourth quarter
net profit on cost cutting and pricing discipline amid a gradual
improvement of job markets in the U.S. and France, which registered
growth for the first time in months during the first few weeks in
2010.
Given the improvement in two of the world's largest economies,
the Zurich-based firm was confident for the months ahead, expecting
a broader recovery in the employment sector which was among the
hardest hit during the downturn, prompting companies such as Adecco
to slash costs as sales fell by more than 30%.
"The year 2009 has been exceptionally tough" said Chief
Executive Patrick De Maeseneire, adding, though, that, "we made the
necessary cost reductions". Thanks to these revamp efforts--which
also include a renewed focus on the placement of highly educated or
professional staff, Adecco will "profit from the upturn", he
said.
The world's largest employment firm in terms of sales ahead of
Netherlands-based Randstad Holding NV (RAND.AE) and Manpower Inc
(MAN) of the U.S., Adecco said net profit for the three months to
the end of December rose to EUR42 million, after a year-earlier net
loss of EUR22 million. That beat forecasts for a EUR35 million
profit.
While fourth quarter sales still fell another 18% to EUR3.79
billion from EUR4.63 billion a year-earlier, Adecco said that
markets in the U.S., France, as well as in Italy, the Nordics and
Iberia have improved in the "recent weeks", boding well for the
months ahead.
"In France and the U.S., the markets are improving and growing
again", said Chief Financial Officer Dominik de Daniel. "We've seen
improvement in the U.S. automotive sector and in France we have
seen more demand in the chemical and IT consulting sector." Adecco
generates about half of its revenue in the U.S. and France.
On the back of this market improvement and the recent takeovers
of professional staffing firms MPS Group and Spring, Adecco now
aims to achieve an operating margin of more than 5.5% in the
mid-term, up from 2.9% in the fourth quarter, CFO de Daniel
said.
"The visibility is still low given the fact that we come out of
the strongest downturn our industry has faced", de Daniel said.
"But the direction is clear and with our new business mix, we
expect to achieve this goal over the next few years".
Including its recent takeovers, Adecco generates--on a pro-forma
2009 basis--about 28% of its overall sales through the placement of
highly-educated staff such as lawyers, consultants and engineers, a
business that promises higher margins than the mass placement of
blue-collar workers.
Meanwhile, Adecco's CEO De Maeseneire said the company will
focus on organic growth after its recent takeover spree. "We will
now focus on the integration of MPS Group and Spring to achieve the
planned synergies. Therefore we will focus on organic growth over
the next few years", he said.
Company Web Site: www.adecco.com
-By Goran Mijuk, Dow Jones Newswires, +41 43 443 80 47;
goran.mijuk@dowjones.com
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