Half year report
Adecco delivers strong performance in Q2 2013
Gradually easing revenue decline, improvement in profitability
Q2 2013 HIGHLIGHTS
*Revenues down 3% organically1
*Gross margin of 17.9%, up 20 bps (30 bps organically)
*SG&A down 3% organically and excluding restructuring and integration costs
*EBITA excluding restructuring and integration costs of EUR 202 million, up
*EBITA margin excluding restructuring and integration costs of 4.1%, up 40
*Net income up 12%, basic EPS up 17%
*To date, 8.9 million shares acquired for EUR 361 million under current
share buyback programme
*New share buyback programme of up to EUR 250 million planned
Key figures Q2 2013
reported constant currency
in EUR millions reported growth
Revenues 4,931 -5% -3%
Gross profit 884 -4% -2%
EBITA excluding restructuring and 202 4% 7%
EBITA2 200 8% 11%
Operating income 190 10% 13%
Net income 126 12%
Zurich, Switzerland, August 8, 2013: Adecco Group, the world's leading
provider of Human Resources solutions, today announced results for Q2 2013.
Revenues were EUR 4.9 billion, down 3% organically. The gross margin was
17.9%, an increase of 20 bps versus the prior year and up 30 bps organically.
Continued strong cost control resulted in 3% lower SG&A, organically and
excluding restructuring and integration costs. The EBITA margin excluding
restructuring and integration costs was 4.1%, up 40 bps compared to the same
quarter last year. Net income was up 12% to EUR 126 million and basic EPS
increased by 17% to EUR 0.69.
Patrick De Maeseneire, CEO of the Adecco Group said: "We delivered a strong
performance in the second quarter. Labour markets are starting to stabilise
around Europe and we see some more positive signs in our business. The gap to
the market narrowed further in France, and North America continued to perform
well. Price discipline and the business mix resulted in an improved gross
margin and we further reduced SG&A year-on-year. This drove a healthy
expansion in our EBITA margin to 4.1%. We exited the quarter with revenues in
June down 2%, organically and adjusted for trading days. July showed a similar
development and the steady improvement so far this year is encouraging for the
second half outlook. Given recent trends and more favourable economic
conditions expected towards the end of 2013, we are convinced we will achieve
our above 5.5% EBITA margin target by 2015."
Q2 2013 FINANCIAL PERFORMANCE
Q2 2013 group revenues of EUR 4.9 billion were down 5% year-on-year, or down
3% organically. Currency fluctuations had a negative impact on revenues of
approximately 2%. Permanent placement revenues amounted to EUR 86 million, a
decrease of 3% in constant currency. Revenues from counter-cyclical Career
Transition (outplacement) totalled EUR 71 million, up 6% in constant currency.
Gross profit amounted to EUR 884 million and the gross margin was 17.9%. Gross
margin was up 20 bps year-on-year, or up 30 bps organically. Temporary
staffing had a 25 bps positive impact on the gross margin and the impact was
up 10 bps from the outplacement business. Permanent placement had a neutral
effect whilst the impact from other activities was down 5 bps organically.
Selling, General and Administrative Expenses (SG&A)
SG&A was EUR 684 million, a decrease compared to Q2 2012 of 7% or -5% in
constant currency. Restructuring costs were EUR 2 million, compared to
restructuring and integration costs in Q2 2012 of EUR 9 million. SG&A
excluding restructuring and integration costs was 3% lower year-on-year
organically. Sequentially, SG&A was flat in constant currency and when
excluding restructuring costs. Organically, FTE employees decreased by 6%
(-1,800) and the branch network decreased by 5% (-280 branches), compared to
Q2 2012. At the end of Q2 2013, the Adecco Group had over 31,000 FTE employees
and operated a network of around 5,200 branches.
EBITA was EUR 200 million, representing an EBITA margin of 4.1%. EBITA
excluding restructuring and integration costs was EUR 202 million, up 7%
organically. The EBITA margin excluding restructuring and integration costs
was 4.1% compared to 3.7% in Q2 2012, an increase of 40 bps year-on-year
reflecting both the improved gross margin and cost reduction measures.
Amortisation of Intangible Assets
Amortisation of intangible assets was EUR 10 million.
Operating income was EUR 190 million.
Interest Expense and Other Income / (Expenses), net
Interest expense was EUR 19 million, the same as in Q2 2012. Other income /
(expenses), net was zero in Q2 2013; this compares to an expense of EUR 14
million in Q2 2012, which was negatively impacted by the sale of a business in
North America. In July 2013, Adecco successfully issued EUR 400 million 2.750%
notes due 2019. As a result, interest expense for the full year 2013 is now
expected to be around EUR 80 million (previously around EUR 75 million).
Provision for Income Taxes
The effective tax rate in the period under review was 26%, compared to 19% in
Q2 2012. In both years, the tax rate was impacted by the successful resolution
of prior years' audits and tax disputes and the expiration of the statute of
limitations in several jurisdictions.
Net Income attributable to Adecco shareholders and EPS
Net income attributable to Adecco shareholders was EUR 126 million, an
increase of 12%. Basic EPS increased by 17% to EUR 0.69, reflecting net income
growth and the impact of the share buyback programme commenced in July 2012.
Cash flow, Net Debt3 and DSO
Cash used in operating activities was EUR 11 million in H1 2013, compared to
operating cash flow of EUR 81 million generated in the same period last year.
In H1 2013, capital expenditure was EUR 36 million and the Group paid
dividends of EUR 266 million and paid EUR 218 million for treasury shares. Net
debt at June 30, 2013 was
EUR 1,482 million, compared with EUR 972 million at December 31, 2012. DSO in
Q2 2013 was 53 days, one day less than in Q2 2012.
In France, revenues of EUR 1.2 billion were down 12% year-on-year, with the
gap to the market continuing to narrow. Permanent placement revenues were down
21%. EBITA was EUR 47 million, impacted by restructuring costs of EUR 2
million. EBITA excluding restructuring costs was EUR 49 million, with the
margin of 4.1% increasing by 80 bps year-on-year. This was helped by the
effect of CICE (the tax credit for competitiveness and employment), for which
we applied the same methodology this quarter as in Q1 2013.
As announced on July 11, 2013, Adecco Group was informed that the French
competition authority has commenced an investigation of the company and
certain of its competitors in France with regards to alleged violations of
French competition law. Adecco is fully cooperating with the authority.
In North America, revenues were EUR 960 million, up 3% organically. General
Staffing revenues were flat in constant currency, with growth in Industrial
and a small decline in Office, while Professional Staffing revenues grew by 4%
organically. Permanent placement revenues continued to develop well, up 10% in
constant currency. EBITA was EUR 49 million, an increase of 14% in constant
currency. The EBITA margin increased by 70 bps to 5.2%, driven by leverage of
previous investments in our IT and MSP/VMS businesses.
In the UK & Ireland, revenues were EUR 469 million, up 4% in constant
currency. Permanent placement revenues were down 16% in constant currency.
EBITA was EUR 8 million, and the EBITA margin was 1.8% (Q2 2012: 0.7%). Note
that Q2 2012 was affected by the London Summer Olympics, with a benefit to
revenues but a negative impact on profitability due to sponsorship costs.
In Germany & Austria, revenues were EUR 387 million, flat compared to Q2 2012.
EBITA was EUR 15 million and the EBITA margin was up 20 bps to 3.7%. From a
seasonal perspective, Q2 has in general the weakest profitability of the year
given the higher number of public holidays.
In Japan, revenues were EUR 283 million, down 9% in constant currency. Despite
the revenue decline, profitability was healthy. EBITA was EUR 18 million and
the EBITA margin was 6.3%, up 30 bps year-on-year.
In Italy, revenues were flat with a strong EBITA margin of 6.7%, up 120 bps
year-on-year. In the Benelux, revenues decreased by 2% and the EBITA margin
was 2.5%, compared to 3.3% in Q2 2012. In the Nordics, revenues were flat in
constant currency. As expected, profitability recovered after the soft start
to the year, with an EBITA margin in Q2 2013 of 4.1%, down 10 bps
In Iberia, revenues declined by 2%. In Australia & New Zealand, revenues fell
by 10% in constant currency. In Switzerland, revenues declined by 3% in
In the Emerging Markets, revenue growth was 8% in constant currency, with a
strong growth acceleration in Eastern Europe. The EBITA margin was 3.1%, down
20 bps year-on-year, as Adecco continues to invest in the region, primarily in
Revenues of LHH, Adecco's Career Transition and Talent Development business,
were up 6% in constant currency to EUR 83 million. EBITA was EUR 24 million
and profitability remained strong, with an EBITA margin of 28.3%.
BUSINESS LINE PERFORMANCE
In General Staffing (Office & Industrial), revenues were EUR 3.7 billion, a
decrease of 4% in constant currency. In the Industrial business, revenues were
down 5% in constant currency. In France, revenues fell by 13% and in both
Italy and Germany & Austria the decline was 1%, while North America grew 3% in
constant currency. In the Office business, revenues were down 2% in constant
currency. Revenues were down 3% in North America, down 13% in Japan and down
5% in the Nordics, all in constant currency. In France, the decline was 8%,
while in the UK & Ireland revenues were up 3% in constant currency.
Professional Staffing4 revenues were EUR 1.1 billion, down 1% in constant
currency but up 2% organically. Revenues in North America were up 4%
organically. In the UK & Ireland revenues were up 3% in constant currency, in
Germany & Austria up 3% and in Japan up 5% in constant currency. In France,
revenues fell by 5%.
In Information Technology (IT), revenues decreased by 2% in constant currency
but grew 3% organically. In North America, revenues grew by 8% organically,
driven by the US IT Professional Staffing business which grew by 11%
organically. Revenues in the UK & Ireland were up 3% in constant currency.
Adecco's Engineering & Technical (E&T) business was up 3% in constant
currency. In North America, revenues were up 3% in constant currency. In
Germany & Austria revenues grew 2%, while in France revenues were up 13%.
In Finance & Legal (F&L), revenues were up 2% in constant currency. Revenues
in North America declined by 1%, but in the UK & Ireland grew by 7%, both in
Medical & Science (M&S) revenues were down 6% in constant currency. North
America grew by 9% but the Nordics declined by 18%, both in constant currency,
while revenues in France were down 23%.
Solutions5 continued to perform well, with 9% growth in constant currency.
Revenue growth in MSP (Managed Service Programmes) and VMS (Vendor Management
System) continued to be strong double-digit in constant currency and the
growth rate further accelerated compared to Q1 2013.
Labour markets are starting to stabilise around Europe and we see some more
positive signs in our business. In France the gap to the market has been
narrowing since the beginning of the year, and elsewhere in continental Europe
rates of decline eased further. North America continues to perform well and
Emerging Markets delivered high-single-digit growth with a strong acceleration
in Eastern Europe. We exited the quarter with Group revenues in June down 2%,
organically and adjusted for trading days. July showed a similar development
and the steady improvement so far this year is encouraging for the second half
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 Q3 2013 is expected to be similar to Q2 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 13 million were invested in H1 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
New 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. To date, the Company has acquired 8.9
million shares for a total consideration of EUR 361 million under this
programme. After completion of the current programme, the Company intends to
launch a new share buyback programme of up to EUR 250 million. The new
programme will also be executed on a second trading line with the SIX Swiss
Exchange with the aim of subsequent cancellation of the shares and reduction
of the share capital, after formal shareholder approval.
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
*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 around 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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