Adecco Net Profit Soars, Plans Buy-back

Swiss recruitment company Adecco SA (ADEN.VX) Thursday reported a steep increase in fourth quarter net profit and said it had enjoyed a strong start to 2011 despite tougher comparisons.

The Zurich-based company also said it wanted to buy up to 2% of its shares "if and when opportune" and said revenues in January had risen 17% compared with the previous year.

At the beginning of 2010, "demand continued to be very healthy in France and North America", Adecco's two main markets, where the pick up already started in the second half of 2009, the company said in a statement.

Growth also remained strong in Germany, Italy, Benelux, Switzerland and the Nordic countries, while Japan returned to positive growth in January 2011.

"Based on these developments, management is confident on strong top line growth in the months ahead, albeit measured against higher comparables," Adecco said.

The outlook was given as the company reported a 32% increase in fourth quarter revenue to EUR4.99 billion, beating expectations of EUR4.92 billion.

Net income increased to EUR141 million from EUR42 million a year earlier, beating a forecast of EUR110.8 million in an poll of analysts by Dow Jones Newswires.

For the whole year, Adecco increased net profit to EUR423 million from EUR8 million, on sales of EUR18.66 billion, up from EUR14.79 billion.

The company said it expects the environment to remain favorable for flexible labor in 2011, with most economic growth and activity being covered by temporary staff.

Permanent jobs will be created, but just enough to cover the new entrants into the labor market. Unemployment is likely to remain at high levels in most developed economies, it said.

The company currently holds 14.6 million treasury shares, which represent 7.7% of total shares issued.

Speaking about the full year, Patrick De Maeseneire, Chief Executive of the Adecco Group said: "2010 was a good year for Adecco.

"Most markets returned to strong double-digit revenue growth during the year."

The growth was mainly driven by the industrial staffing segment, and also the later cyclical office and professional staffing segments returned to growth, he said.

"Coming out of the downturn, our customers clearly value flexibility more than in the past and see it as a strategic component of their labour force.

"We therefore strongly believe that penetration rates of flexible labour will surpass the previous peaks of 2007 and 2008."

The company's operating margin had improved 110 basis point to 4.5%, and Adecco is now in "good shape" to achieve its mid-term EBITA margin target of over 5.5%, De Maeseneire said.

The performance follows positive results by rival staffing companies Randstad Holding NV (RAND.AE) and Manpower Inc (MAN).

Adecco shares closed Wednesday at CHF61.7, and have gained so far in 2011.

-By John Revill, Dow Jones Newswires; +41 43 443 8042 ; john.revill@dowjones.com

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