UK and Ireland revenues flat in Q1 2016 for Adecco
The Adecco Group has announced its results for the first quarter of 2016.
Revenues were EUR 5.3 billion, up 4% organically compared to the prior year. Gross profit was up 2% and SG&A was up 4%, both organically. The EBITA margin was 4.3%, down 30 bps. Net income attributable to Adecco shareholders was down 10% to EUR 144 million and basic EPS was down 8% to EUR 0.85.
Q1 2016 revenues of EUR 5,332m were up 5% year-on-year or up 4% organically. By business line, revenues grew in constant currency by 5% in general staffing and by 2% in professional staffing. Permanent placement revenues were EUR 114m, up 12% organically. Revenues from career transition totalled EUR 95m, up 4% organically compared to the prior year.
Gross profit amounted to EUR 1,011m, up 4% or up 2% organically. The gross margin was 19.0%, down 10 bps compared to Q1 2015.
Selling, general and administrative expenses (SG&A) was EUR 783m, up 4% organically compared to Q1 2015. Compared to Q1 2015, the branch network was up 1%. Sequentially, SG&A was up 1% in constant currency and excluding Q4 2015 one-offs.
EBITA was EUR 228m, down 5% organically compared to Q1 2015. The EBITA margin was 4.3%, down 30 bps, due to the timing of bank holidays and higher IT costs in Q1 2016.
Operating income was EUR 219m compared to EUR 228m in the same period last year. Net income attributable to Adecco shareholders was EUR 144m compared to EUR 160m in Q1 2015. Cash flow, net debt and DSO cash flow used in operating activities was EUR 42m in Q1 2016.
Alain Dehaze, CEO of the Adecco Group, said, “In the first quarter, our colleagues and associates at the Adecco Group delivered a good performance. Revenues continued the trend of modest growth seen during 2015. Our relative revenue growth compared to our main peers improved and we are back in line with the market growth in France, our largest market. We maintained our price discipline and costs remained under control, with 4% organic revenue growth being supported by a 3% increase in FTE employees.
“In March and April combined, revenue growth was 3% organically and adjusted for trading days. We remain focused on driving profitable growth across our business, supported by the implementation of our strategic priorities. We are delighted that today we will welcome new colleagues to the Adecco Group following the completion of the acquisition of Penna, which further reinforces our leading global position in career transition, talent development and recruitment solutions.”
In the UK & Ireland, revenues were flat at EUR 545m. Approximately two-thirds of revenues come from professional staffing, which declined by 6%. Revenues decreased by 6% in finance & legal and by 5% in IT. In general staffing, revenues increased by 12%. Permanent placement revenues in the UK & Ireland were up 1%. EBITA was EUR 11m and the EBITA margin was 2.0% compared to 2.2% in Q1 2015.
In France, revenues were EUR 1,105m, up 7% and back in-line with the market growth in France. Revenues increased by 7% in general staffing, which accounts for over 90% of revenues, and declined by 2% in professional staffing. Revenue growth continued in construction, remained very strong in automotive, and accelerated in retail and in logistics. Permanent placement revenues in France were up 31%. EBITA was EUR 63m and the EBITA margin was 5.7%, down 30 bps compared to the prior year.
In North America, revenues were EUR 1,149m, up 1%. In North America, general staffing accounts for approximately half of revenues, and declined by 2%. In industrial, revenue growth was flat while in office revenues declined by 6%. In professional staffing, revenues were up 4%, with growth of 29% in medical & science, 15% in finance & legal and 2% in IT, while engineering & technical declined by 10%. Permanent placement revenues in North America were up 9%. EBITA was EUR 66m with a margin of 5.7%, up 20 bps compared to Q1 2015.
In Germany, Austria, Switzerland revenues were EUR 509m, down 2%. In Germany & Austria, revenues were flat, as a decline in automotive was offset by growth in sectors such as manufacturing and chemicals. In Switzerland, revenues declined by 8%, negatively impacted by reductions in the export-related and medical sectors. EBITA in Germany, Austria, Switzerland was EUR 19m, with a margin of 3.7%.
In Benelux and Nordics, revenues increased by 5% to EUR 436m. Revenues in Benelux were up 10% with good growth in all three countries in the region. In the Nordics, revenues were down 1%, with continued growth in Sweden and a sequential improvement in Norway. The EBITA margin in Benelux and Nordics was flat year-on-year at 2.2%. Profitability improved in the Nordics compared to Q1 2015, driven by restructuring measures taken in Norway during 2015.
In Italy, revenues were EUR 319m, up 9% against a strong comparison base. The EBITA margin was 7.0%, up 140 bps year-on-year, driven by continued good growth in permanent placement and helped by the effect of regulation changes.
In Japan, revenues increased by 2% to EUR 300m. EBITA was EUR 20m and the EBITA margin was 6.7%, up 40 bps compared to the prior year mainly due to good cost development.
In Iberia, revenues were EUR 220m, up 9% against a strong comparison base. The EBITA margin was down 90 bps year-on-year to 3.4%, negatively impacted by lower activity in the outsourcing business.
In Rest of World, revenues grew by 13% to EUR 643m. Revenue growth was 4% in Australia & New Zealand, 13% in Latin America, 19% in Eastern Europe & MENA, 8% in Asia and 23% in India. The EBITA margin in Rest of World was 2.5%, down 60 bps partly due to a bad debt charge in Australia in Q1 2016.
On 9th May 2016, Adecco stated that all closing conditions of the recommended cash offer for all outstanding shares of Penna Consulting Plc have been fulfilled or waived. The recommended cash offer is effected by way of a scheme of arrangement under Part 26 of the UK Companies Act 2006, which has been sanctioned by the court. The closing of the transaction is expected to occur today, 10th May 2016, following the scheme’s registration with the UK registrar of companies.