Adecco SA, the world’s largest provider of temporary workers, said third-quarter profit rose 61 percent on a rebound in Spain and Italy and forecast higher demand for flexible labor as European countries exit recession.
“We are coming out of the most severe downturn we’ve had in our lives,” Chief Executive Officer Patrick De Maeseneire said in a phone interview. “The restructuring measures companies had to take were enormous.”
Adecco said there has been an “especially encouraging” pickup in demand for temp workers in Spain and Italy after labor reforms in those countries. The company also said the rate of sales decline is easing in France, its largest market. The stock rose to a six-year high.
De Maeseneire has guided the Swiss company through a downturn as Europe’s largest economies faltered since he became CEO in 2009. Spain exited a two-year recession in the third quarter, while Italy’s record jobless rate in September is leading that country’s recession to persist.
“It’s clear that the additional economic activity happening in those countries is being done mainly with temps,” De Maeseneire said.
France’s gross domestic product is forecast to rise 0.9 percent in 2014 compared with an expected 0.1 percent increase this year, a Bloomberg survey showed last month. Still, the European Union yesterday trimmed its forecast yesterday for euro-area growth next year, predicting economies will struggle to gain momentum with unemployment at a record.
Adecco’s stock rose as much as 6.1 percent to a six-year high of 70.10 Swiss francs. The shares traded 6 percent higher at 70.05 francs at 11:04 a.m. in Zurich, bringing this year’s gain to 46 percent.
Net income increased to 190 million euros ($257 million), beating the 138.2 million-euro average estimate of five analysts in a Bloomberg survey. Sales in constant currencies were unchanged at 5 billion euros, the Glattbrugg, Switzerland-based company said in a statement today.
There will be “bumps along the growth path” as in most European countries like France, Belgium and Germany it is still costly to reduce staff, he said. Companies will favor hiring temporary employees to avoid benefit and pension costs, he said.
Adecco’s chief reiterated a target of achieving a 5.5 percent margin for earnings before interest, taxes and amortization by 2015, citing more favorable economic conditions expected from the end of this year. The margin was 4 percent last year before restructuring and integration costs, and it reached 5.5 percent in the third quarter of 2013 before restructuring costs.
Adecco had the equivalent of more than 31,000 full-time employees and operated a network of about 5,100 branches at the end of the third quarter.