Adecco Rebuilds U.S. After Taking Eye Off Most Lucrative Market
Stock Chart for Adecco SA (ADEN)
Adecco, the world’s biggest supplier of temporary workers, is rebuilding its U.S. presence after “missing the boat” in the lucrative computer-staffing market, Chief Executive Officer Patrick De Maeseneire said.
Adecco has struggled to keep up with the American market since doubling its global information-technology staffing sales to $800 million by acquiring U.S.-based MPS Group Inc. for $1.2 billion in 2010.
The focus on integrating MPS meant Adecco had its “eye off the market,” De Maeseneire said yesterday in an interview in Paris. “It didn’t let us hire the additional resources we needed in our IT business on time to cope with the market growth. We missed the boat there.”
While the U.S. business is Adecco’s second biggest behind France by sales, it yields more operating income, Chief Financial Officer Dominik De Daniel told Bloomberg News at an investor day in Paris. After a series of disappointing results, Adecco’s top executives in May toured the U.S., where some of the 70 branch managers were underperforming, and fired the manager of the American IT staffing unit, he said.
“We had a top-line growth issue,” said De Maeseneire. “We really dug into the details.”
Now that Adecco has a “good footprint in the U.S., we really need to attack the small and medium-sized accounts,” De Daniel said. “The share of profit from the U.S. will increase in the mid term,” with growth driven by the automotive and technology industries, he said.
Any U.S. expansion certainly won’t come through takeovers. De Daniel used yesterday’s investor day to announce a two-year freeze on purchases after Adecco spent $216 million on career- transition adviser Drake Beam Morin Inc. last year and 90 million euros ($117 million) on Japan’s VSN Inc. in January. The company won’t begin evaluating any potential acquisitions for at least 18 months, De Daniel said.
Instead, Adecco is spending 400 million euros on a share buyback announced in June. On Sept. 18, the company sold 100 million Swiss francs ($107 million) of additional bonds to fund the purchase. Adecco has so far bought back 1.2 million shares, and aims to complete the buyback next year, De Daniel said.
Adecco traded at 48.19 francs at 11:27 a.m. in Zurich, giving the company a market value of 9.12 billion francs.
In France, which yielded 27 percent of sales in the second quarter compared with 19 percent from the U.S., Adecco is cutting 15 percent of branches and 530 full-time employees, said Alain Dehaze, head of the company’s French unit, in a Sept. 19 presentation to investor.
Those cuts, and merging some Adecco branches with those of its unit Adia SA, will bring 45 million euros in savings, he said.
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