1st Quarter Results
Adecco sees stabilising revenue trends in Q1 2013
A solid first quarter on the back of a resilient gross margin and good cost
First quarter 2013 HIGHLIGHTS
*Revenues down -5% organically1 and adjusted for trading days
*Gross margin at 18.0%, down 20 bps (-10 bps organically)
*SG&A down 3% organically and excluding restructuring and integration costs
*Restructuring costs in Q1 2013 amounted to EUR 11 million, of which EUR 6
million related to France
*EBITA2 excluding restructuring costs at EUR 138 million
*EBITA margin at 3.0%, down 80 bps compared to Q1 last year, excluding
restructuring and integration costs
*Net income attributable to Adecco shareholders of EUR 67 million
*To date 7.5 million shares purchased for EUR 299 million under current
share buyback programme
Key figures Q1 2013
reported constant currency
in EUR millions reported growth
Revenues 4,556 -10% -8%
Gross profit 821 -10% -9%
EBITA before restructuring and integration 138 -29% -27%
EBITA 127 -30% -29%
Operating income 116 -31% -29%
Net income attributable to Adecco 67 -40%
Zurich, Switzerland, May 7, 2013: Adecco Group, the world's leading provider
of Human Resources solutions, today announced results for the first quarter of
2013. Revenues were EUR 4.6 billion, down 7% organically or down 5%
organically and adjusted for trading days. The gross margin was 18.0%, a
decrease of 20 bps versus the prior year and down 10 bps organically.
Continued strong cost control resulted in 3% lower SG&A organically and when
excluding restructuring and integration costs. The Q1 2013 EBITA margin
excluding restructuring costs was 3.0%, down 80 bps compared to Q1 last year.
Net income attributable to Adecco shareholders was EUR 67 million.
Patrick De Maeseneire, CEO of the Adecco Group said: "Considering the economic
headwinds in Europe, we achieved a solid first quarter. Revenues are starting
to bottom out in Europe with the gap to the market narrowing in France. North
America continues to hold up well driven by both General and Professional
Staffing. Price discipline and the business mix resulted in a resilient gross
margin, despite the negative impact from fewer trading days in Q1 2013.
Measures taken to align the cost base with revenue developments are evident in
the reduction in SG&A year-on-year and our profitability remained solid. We
exited the first quarter with revenues down 4% in March, organically and
adjusted for trading days, and April showed a similar trend. We remain focused
on our six strategic priorities and on reaching our above 5.5% EBITA margin
target. Given recent trends and more favourable economic conditions expected
towards the end of 2013, we are convinced we will achieve this target by
Q1 2013 FINANCIAL PERFORMANCE
Group revenues in Q1 2013 were EUR 4.6 billion, down 10% or down 8% in
constant currency. Organically, revenues were down 7% (-5% organically and
adjusted for trading days). Permanent placement revenues amounted to EUR 81
million, a decrease of 9% in constant currency, while revenues from the
counter-cyclical Career Transition (outplacement) business totalled EUR 71
million, up 5% in constant currency.
In Q1 2013, gross profit amounted to EUR 821 million and the gross margin was
18.0%, down 20 bps compared to the prior year's first quarter. Organically the
gross margin was down 10 bps in the quarter under review. Temporary staffing
had an organic 25 bps negative impact on the gross margin, partly due to
timing of the bank holidays. This in particular impacted temporary staffing
margins in Germany and Sweden, where temporary employees are on Adecco's
payroll. Organically, permanent placement and other activities had a neutral
impact on the gross margin, whereas the impact was +15 bps from outplacement.
Selling, General and Administrative Expenses (SG&A)
SG&A in Q1 2013 amounted to EUR 694 million, a decrease of 5% or 4% in
constant currency compared to Q1 2012. SG&A was 3% lower year-on-year on an
organic basis and excluding restructuring and integration costs. Restructuring
costs were EUR 11 million in the quarter under review, of which EUR 6 million
related to France, EUR 1 million for other countries and EUR 4 million for the
consolidation of several data centres in North America. In the prior year's
first quarter, costs related to the integration of DBM totalled EUR 3 million
and EUR 8 million related to restructuring costs for various European
countries. Sequentially, SG&A was flat in constant currency and when excluding
restructuring costs. Organically, FTE employees decreased by 5% (-1,800)
compared to the first quarter of 2012 and the branch network decreased by 5%
(-280 branches). At the end of the first quarter of 2013, the Adecco Group had
over 31,000 FTE employees and operated a network of over 5,200 branches.
In the period under review, EBITA excluding restructuring costs was EUR 138
million and the margin was 3.0%, compared to the Q1 2012 EBITA margin of 3.8%,
excluding restructuring and integration costs. EBITA was EUR 127 million
compared with EUR 182 million in the first quarter of 2012. The Q1 2013 EBITA
margin was 2.8% compared to 3.6% in Q1 2012.
Amortisation of Intangible Assets
Amortisation in Q1 2013 was EUR 11 million, compared to EUR 14 million in Q1
In Q1 2013, operating income was EUR 116 million. This compares to EUR 168
million in the first quarter of 2012.
Interest Expense and Other Income / (Expenses), net
The interest expense amounted to EUR 19 million in the period under review,
compared to an expense of EUR 18 million in Q1 2012. Other income /
(expenses), net was an expense of EUR 2 million in Q1 2013, compared to income
of EUR 3 million in the first quarter of 2012. Interest expense is expected to
be around EUR 75 million for the full year 2013.
Provision for Income Taxes
The effective tax rate in the period under review was 29% compared to 27% in
Net Income attributable to Adecco shareholders and EPS
In the period under review, net income attributable to Adecco shareholders was
EUR 67 million. This compares to EUR 112 million in Q1 2012. Basic EPS in Q1
2013 was EUR 0.37 (Q1 2012: EUR 0.59).
Cash flow, Net Debt3 and DSO
Cash used in operating activities was EUR 28 million in the first quarter of
2013 compared to operating cash flow of EUR 137 million generated in the same
period last year. Q1 2013 was impacted by social security payments relating to
prior years and by lower collection of receivables at the end of March, given
the timing of Easter. The Group invested EUR 20 million in capex and paid EUR
69 million for treasury shares. Net debt at the end of March 2013 was EUR
1,070 million compared to EUR 972 million at year end 2012. DSO was 54 days in
the first quarter of 2013, as well as in the first quarter of 2012.
In Q1 2013, currency fluctuations had a negative impact on revenues of
Revenues in France amounted to EUR 1.1 billion, down 17% (-15% adjusted for
trading days) compared to Q1 2012. The gap to the market narrowed. Permanent
placement revenues were down 24%. In the quarter under review, EBITA was EUR
21 million, compared to EUR 27 million in Q1 2012. Excluding restructuring
costs of EUR 6 million incurred in Q1 2013 and EUR 3 million in Q1 2012, the
EBITA margin was 2.5%, up 20 bps compared to Q1 2012, helped by the impact of
"CICE" (Tax Credit and Competitive Employment Act).
In North America, Adecco's revenues increased 2% organically (+4% organically
and adjusted for trading days) to EUR 888 million in Q1 2013. General Staffing
revenues increased 2% in constant currency and Professional Staffing revenues
grew by 2% organically. The North American IT Professional Staffing segment
grew 5% organically year-on-year in Q1 2013. The Medical & Science business
was again up strongly, by 14% in constant currency. While Engineering &
Technical was flat year-on-year, Finance & Legal declined by 4%, both in
constant currency. Permanent placement revenues continued to develop well, up
14% in constant currency. EBITA was EUR 32 million in the quarter under
review. Excluding EUR 4 million restructuring costs incurred for the
consolidation of several data centres, the EBITA margin was at 4.0% in Q1 2013
compared to 4.3% a year ago.
In the UK & Ireland, revenues were flat in constant currency (+4% in constant
currency and adjusted for trading days) at EUR 456 million. Permanent
placement revenues were down 26% in constant currency. EBITA was EUR 8 million
in Q1 2013 and the EBITA margin was 1.8% compared to an EBITA margin of 2.4%
in Q1 2012.
In Germany & Austria, Q1 2013 revenues declined by 8% organically (-4%
organically and adjusted for trading days) to EUR 373 million, compared
against the high base of last year (Q1 2012: +10% year-on-year organic revenue
growth). EBITA amounted to EUR 18 million in Q1 2013 and the EBITA margin was
4.9% compared to the Q1 2012 EBITA margin, excluding restructuring costs, of
8.3%. Results in the period under review were impacted by the timing of the
bank holidays and lower utilisation.
In Japan, revenues were down 21% in constant currency (-15% in constant
currency and adjusted for trading days) to EUR 292 million, still impacted by
the completion of several outsourcing projects during 2012. EBITA was EUR 13
million and the EBITA margin was 4.5%, down 130 bps compared to the first
quarter of 2012.
Revenues in Italy declined 6% (-4% adjusted for trading days). EBITA amounted
to EUR 11 million and the EBITA margin was 4.9% compared to 5.4% in Q1 2012.
In Q1 2013, revenues in Benelux decreased by 9% (-6% adjusted for trading
days). Revenue development was below the market in the Netherlands, but ahead
of the market in Belgium. In the period under consideration, EBITA was EUR 4
million and the EBITA margin was 1.8%. In Q1 2012, excluding restructuring
costs of EUR 1 million, the EBITA margin was 3.9%.
Revenues in the Nordics were down 6% in constant currency (-1% in constant
currency and adjusted for trading days). Revenues decreased in Sweden and
Norway, but increased in Denmark, year-on-year in constant currency. The EBITA
margin in Q1 2013 was -0.6%, also impacted by the timing of bank holidays.
In Iberia revenues declined by 9% (-5% adjusted for trading days), as economic
conditions in the region remained difficult. Revenues in Australia & New
Zealand were down 11% in constant currency (-8% in constant currency and
adjusted for trading days). In Switzerland revenues declined by 9% in constant
currency in Q1 2013 (-5% in constant currency and adjusted for trading days).
The Emerging Markets grew 4% in constant currency (+8% in constant currency
and adjusted for trading days) to EUR 449 million, mainly driven by Latin
America. The EBITA margin was 2.9%, down 20 bps when compared to the same
period last year.
Revenues of Lee Hecht Harrison (LHH), Adecco's Career Transition & Talent
Development business were EUR 79 million, up 3% in constant currency compared
to Q1 2012. EBITA was EUR 21 million and profitability remained strong, as the
EBITA margin reached 26.9%. In Q1 2012, excluding integration costs of EUR 3
million related to DBM, the EBITA margin was 30.2%.
BUSINESS LINE PERFORMANCE
Adecco's revenues in the General Staffing business (Office & Industrial)
decreased by 9% in constant currency to EUR 3.4 billion. Revenues in the
Industrial business were down 10% in constant currency. In France, revenues
declined by 18% in Q1 2013 and in Italy by 6%. Germany & Austria was down 10%
organically year-on-year. In constant currency, revenues in Industrial in
North America grew 3% in Q1 2013. In the Office business, revenues were down
8% in constant currency. Revenues in Q1 2013 in Japan were down 25%, in the
Nordics down 13% and in North America and UK & Ireland flat, all in constant
Professional Staffing4 revenues decreased 4% in constant currency (-2%
organically). Year-on-year revenue growth in North America was 2% organically
in Q1 2013. In the UK & Ireland, revenues were flat in constant currency.
Revenues in France were down 7%.
In Information Technology (IT), revenues were down 7% in constant currency
(-2% organically). In North America, revenues grew by 5% organically, driven
by the US IT Professional Staffing business, which grew by 9% organically.
Revenues in the UK & Ireland were flat in constant currency.
Adecco's Engineering & Technical (E&T) business was down 1% in constant
currency. In Germany & Austria revenues declined by 2%, while in France
revenues grew by 10%. In North America revenues were flat in constant
In Finance & Legal (F&L), revenues were down 2% in constant currency. Revenues
in North America declined 4%, while the UK & Ireland grew by 7% in Q1 2013,
all in constant currency.
In Q1 2013, revenues in Medical & Science (M&S) were down 4% in constant
currency. While revenues in North America were up 14%, revenues in the Nordics
declined by 16%, both in constant currency. Revenues in France were down 23%
in the quarter under review.
In the first quarter of 2013, revenues in Solutions5 were up 5% in constant
currency. Revenue growth in MSP (Managed Service Programmes) and VMS (Vendor
Management System) continued to be strongly double-digit in constant currency.
The Group exited the first quarter of 2013 with an organic revenue decline
rate of 4% in March, adjusted for trading days. Revenue developments in April
were similar. North America continued to hold up well. In France the gap to
the market narrowed since the beginning of the year, but conditions remained
challenging. Elsewhere in Europe revenue growth stabilised or improved
slightly. In the Emerging Markets revenue growth continued to be solid.
Given these trends, we maintain our price discipline and cost control. At the
same time, we continue to invest in organic growth opportunities and the
consolidation of our IT platforms, whilst focusing on our strategic
priorities. SG&A in the second quarter of 2013 is expected to be similar to Q1
2013 on a constant currency basis and before one-off costs. As announced in
March this year, we plan to invest a total of EUR 30 million in 2013 to
further optimise the cost base, of which EUR 11 million were invested in Q1
2013 and the remainder will be incurred during the rest of 2013.
We continue to be very focused on reaching our mid-term EBITA margin target of
above 5.5%. Given recent trends and more favourable economic conditions
expected towards the end of 2013, we are convinced we will achieve this target
Update on the share buyback programme
In June 2012, the Company launched a share buyback programme of up to EUR 400
million on a second trading line with the aim of subsequently cancelling the
shares and reducing the share capital. The share buyback commenced in mid-July
2012. To date, the Company has acquired 7.5 million shares under this
programme for EUR 299 million.
For further information please contact:
Adecco Corporate Investor Relations
Investor.firstname.lastname@example.org or +41 (0) 44 878 89 89
Adecco Corporate Press Office
Press.email@example.com or +41 (0) 44 878 87 87
Q1 2013 Results Conference Calls
There will be a media conference call at 9 am CET as well as an analyst
conference call at 11 am CET, details of which can be found in the Investor
Relations section on our website.
UK / Global + 44 (0)203 059 58 62
United States + 1 631 570 56 13
Cont. Europe + 41 (0)58 310 50 00
Financial Agenda 2012/2013
*Q2/1H 2013 results August 8, 2013
*Q3 2013 results November 6, 2013
*Q4/FY 2013 results March 12, 2014
Information in this release may involve guidance, expectations, beliefs,
plans, intentions or strategies regarding the future. These forward-looking
statements involve risks and uncertainties. All forward-looking statements
included in this release are based on information available to Adecco S.A. as
of the date of this release, and we assume no duty to update any such
forward-looking statements. The forward-looking statements in this release are
not guarantees of future performance and actual results could differ
materially from our current expectations. Numerous factors could cause or
contribute to such differences. Factors that could affect the Company's
forward-looking statements include, among other things: global GDP trends and
the demand for temporary work; changes in regulation of temporary work;
intense competition in the markets in which the Company operates; integration
of acquired companies; changes in the Company's ability to attract and retain
qualified internal and external personnel or clients; the potential impact of
disruptions related to IT; any adverse developments in existing commercial
relationships, disputes or legal and tax proceedings.
About the Adecco Group
The Adecco Group, based in Zurich, Switzerland, is the world's leading
provider of HR solutions. With over 31,000 FTE employees and over 5,200
branches, in over 60 countries and territories around the world, Adecco Group
offers a wide variety of services, connecting more than 650,000 associates
with over 100,000 clients every day. The services offered fall into the broad
categories of temporary staffing, permanent placement, career transition and
talent development, as well as outsourcing and consulting. The Adecco Group is
a Fortune Global 500 company.
Adecco S.A. is registered in Switzerland (ISIN: CH0012138605) and listed on
the SIX Swiss Exchange (ADEN).
1 Organic growth is a non US GAAP measure and excludes the impact of currency,
acquisitions and divestitures.
2 EBITA is a non US GAAP measure and refers to operating income before
amortisation of intangible assets.
3 Net debt is a non US GAAP measure and comprises short-term and long-term
debt less cash and cash equivalents and short-term investments.
4 Professional Staffing refers to Adecco's Information Technology, Engineering
& Technical, Finance & Legal, and Medical & Science businesses.
Solutions include revenues from Career Transition & Talent Development
5 (CTTD), Managed Service Programmes (MSP), Recruitment Process Outsourcing
(RPO) and Vendor Management System (VMS).
Press Release (PDF)
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