UPDATE: Adecco 1Q Net Profit Up On US, France Recovery

Adecco SA (ADEN.VX) Thursday said it more than doubled first-quarter net profit on the back of improved job markets in the U.S. and France as well as cost cutting, expecting staffing markets to continue their recovery during the second quarter.

The world's largest staffing company in terms of sales ahead of Netherlands-based Randstand Holding NV (RAND.AE) and Manpower Inc (MAN) of the U.S. said first-quarter net profit jumped to EUR57 million from EUR23 million in the year-earlier period, beating analyst forecasts of EUR50 million.

Revenues, which fell constantly during the downturn, also improved 7% to EUR3.96 billion from EUR3.70 billion a year earlier, partly helped by acquisitions.

While Japan, Germany, the U.K. and Ireland and Switzerland still suffered from revenue declines, France and the U.S., the company's two key markets, showed clear signs of improvement.

"The figures show that the job markets are improving, especially in the U.S., where Adecco showed a 2% organic increase," said Marco Strittmatter, analysts at Zuercher Kantonalbank.

"Although some markets are still in the red, the improvement from last year is substantial," Strittmatter said, noting that Adecco's cost discipline also helped the company improve its operating margin by 30 basis points to 2.8%.

Adecco, like most of its competitors, faced severe headwinds during the crisis as companies worldwide cut jobs and introduced short-time work, reducing the need for temporary employment.

Many companies such as Adecco lost more than 30% of their annual revenue and analysts expect it may take at least two to three years before employment firms can reach their pre-crisis size as firms will continue to curb costs.

Chief Executive Officer Patrick de Maeseneire said trading conditions in the market for placing blue-collar workers had improved in the first quarter. He cautioned, however, that pricing pressure remained acute, forcing Adecco to continue to slash costs by reducing its own staff and cutting its branch network.

"Looking into the second quarter, we continue to see good revenue developments in the majority of our markets," de Maeseneire said, adding that "we will continue our strong cost control, which together with our disciplined pricing, position us very well to take full advantage of the improving economic conditions."

Company website: www.adecco.com

-By Goran Mijuk, Dow Jones Newswires, +41 43 443 80 47; goran.mijuk@dowjones.com

Randstad NV (EU:RAND)
Historical Stock Chart
From Jun 2024 to Jul 2024