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Adecco Q2 earnings: North American revenue growth slows, softened environment in Europe

August 08, 2019

Global revenue at The Adecco Group fell 2% in the second quarter. The Switzerland-based firm with staffing operations around the world reported North American staffing revenue slowed modestly with a challenging comparison from the year-ago quarter, and growth softened in most European countries. On the other hand, it said revenue growth was “robust” in Japan and other parts of the world.

Second-quarter revenue fell 4% when measured on organic basis — excluding the impact of currencies, acquisitions and divestitures. That compares to a year-over-year decline of 2% in the first quarter.

“Organic revenue growth slowed in the quarter, driven mainly by Europe,” CEO Alain Dehaze said. “This partly reflected robust growth in the same period of the prior year, and also continued weakness in automotive and manufacturing sectors in many European economies.”

Permanent placement revenue rose 1% on an organic basis, but temporary staffing revenue fell by 5% organically. Gross profit improved.

(€millions) Q2 2019 Q2 2018 % change % organic change % organic, business days adjusted Q2 2019 (US$millions)
Revenue € 5,923 € 6,052 -2% -4% -3% $6,732
Gross profit € 1,128 € 1,107 2% -1% - $1,282
Gross margin 19.0% 18.3% - - - -
Net income  € 159 € 170 -6% - - $181

In Adecco’s North American operations, the company noted a moderation in the growth of the US market for the company’s general staffing operations as well as a challenging comparison from the prior year’s quarter. General staffing perm placement revenue rose 11% in North America.

Perm placement in the company’s North American professional staffing operations were up 8% organically.

Revenue by geography

(€millions) Q2 2019 Q2 2018 % change % organic change % organic, business days adjusted Q2 2019 (US$millions)
France € 1,420 € 1,472 -4% -3% -3% $1,614
North America, UK & Ireland General Staffing € 735 € 711 3% -2% -1% $835
North America, UK & Ireland Professional Staffing € 863 € 860 0% -4% -4% $981
Germany, Austria, Switzerland € 474 € 553 -14% -16% -15% $539
Benelux and Nordics € 482 € 530 -9% -8% -7% $548
Italy € 497 € 521 -5% -5% -6% $565
Japan € 364 € 324 12% 6% 12% $414
Iberia € 286 € 287 0% 0% 4% $325
Rest of World € 673 € 685 -2% 1% 2% $765
Career Transition & Talent Development € 129 € 109 19% -1% -1% $147

Revenue fell 1% on an organic basis in Adecco’s “career transition and development” business line, although it was up 19% on a reported basis. The division includes its Lee Hecht Harrison outplacement operations and training provider General Assembly, which it announced in April 2018 that it had acquired.

“Increased collaboration between our brands has created new opportunities to deliver improved solutions to our customers, with positive examples in Q2,” Dehaze said. “Integrating General Assembly’s up/reskilling solutions into the Lee Hecht Harrison [operations] is enabling new client business. Additionally, we launched the Modis Academy in the US, an innovative solution to address persistent talent shortages in high-demand tech skills.”

Revenue by business line

(€millions) Q2 2019 Q2 2018 % change % constant currency Q2 2019 (US$millions)
Office € 1,395 € 1,372 2% 0% $1,586
Industrial € 3,043 € 3,253 -6% -7% $3,459
Information Technology € 730 € 721 1% -2% $830
Engineering & Technical € 182 € 170 7% 3% $207
Finance & Legal € 250 € 251 0% -5% $284
Medical & Science € 148 € 135 10% 5% $168
           
Career Transition & Talent Development € 129 € 109 19% 14% $147
BPO € 46 € 41 12% 7% $52

Share price and market cap

Shares in The Adecco Group closed up 1.54% today to 52.80 Swiss francs; the company had a market cap of 8.44 billion Swiss francs, according to FT.com.

For a European perspective on Adecco’s results, please see the coverage by our London office.

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