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Revenues down 2% YoY in Q1 2019 for The Adecco Group

The Adecco Group has released its results for the first quarter of 2019.


Q1 2019 revenues were EUR 5,645m, down 1% year-on-year on a reported basis. Currency movements had a positive impact on revenues of approximately 1% and M&A had a positive impact of around 0.5%, while the number of working days had a negative impact of around 1%. On an organic and trading days adjusted basis revenues decreased by approximately 2%. 


Alain Dehaze (pictured), group chief executive officer, commented, “The Group delivered a strong performance in Q1 2019, improving the EBITA margin by 20 bps even as our digital investments increased. We continue to make good progress with our GrowTogether transformation programme, which underpinned another quarter of robust productivity growth. And a focus on pricing discipline and improving the business mix with higher-value solutions supported further gross margin improvement. 


“While revenues declined by 2% trading days adjusted, year-on-year, the trend in our European markets stabilised during the quarter and the exit rate for the Group was in-line with Q1. We also delivered accelerating growth in the Japan and Rest of World region, which helped offset the slowdown in North America.


“The ‘Perform, Transform, Innovate’ strategy continues to build momentum. We are on track to deliver our target of a further EUR 70 million of productivity savings from GrowTogether in 2019. We are also strengthening our customer value proposition, as evidenced by our improving NPS. 


“We are only part way through our transformation journey but I am pleased by the progress made so far, and excited about the potential still to be delivered in 2019 and beyond. I would like to thank every one of our worldwide colleagues for their contributions to building a stronger Adecco Group that will help make the future work for everyone.”  


Temporary staffing revenues declined by 3%, to EUR 4,827m; permanent placement revenues increased by 5%, to EUR 144m; revenues from career transition were EUR 86m, down 5%; and revenues in outsourcing and other activities were EUR 588m, up 4% compared to the prior year, all on an organic basis. By business line, on an organic basis, revenues were down 3% in general staffing, down 2% in professional staffing, and up 4% in solutions.


Gross profit was EUR 1,080m in Q1 2019, up 5% on a reported basis and stable organically. Gross margin was 19.1%, up 100 bps compared to Q1 2018. Currency and the consolidation of General Assembly and Vettery had a positive impact on gross margin of 10 bps and 30 bps, respectively. Therefore, on an organic basis, the gross margin was up 60 bps, comprising positive contributions from temporary staffing (+40 bps) and permanent placement (+20 bps), a negative contribution from career transition (-5 bps) and a positive from other activities (+5 bps). The improvement of 40 bps in the temporary staffing gross margin was driven by a positive development in price/mix (+20 bps), as well as favourable bank holiday timing (+10 bps) and the base effect of unusually high sickness rates and strikes in Germany in the prior year (+10 bps). 


SG&A excluding one-offs was EUR 854m, up 4% year-on-year on a reported basis. On an organic basis, SG&A excluding one-offs declined 1% year-on-year, reflecting good cost management and benefits from the GrowTogether programme. Operating income was EUR 207 million, compared to EUR 185 million in Q1 2018.


EBITA was EUR 221m. EBITA excluding one-offs was EUR 226m, up 8% organically. EBITA margin excluding one-offs was 4.0%, up 20 bps year-on-year on a reported basis. Increased investments in the New Ventures had a negative impact of 20 bps and the business transformation in Germany had a negative impact of 10 bps. Favourable bank holiday timing and prior year non-recurring items had a positive impact of 20 bps. This leaves an underlying improvement of approximately 30 bps year-on-year, supported by GrowTogether productivity savings and the positive temporary staffing price/mix development. The conversion ratio of gross profit into EBITA excluding one-offs was 20.9%, up 20 bps on a reported basis and up 150 bps organically year-on-year.

In France, revenues were EUR 1,283m, a decline of 2%, or a decline of 1% trading days adjusted. Growth was stable compared to Q4 2018 and broadly in-line with the market.


In North America, UK & Ireland General Staffing, revenues were EUR 714m, an increase of 1%, or 2% trading days adjusted. North America General Staffing, which accounts for approximately 75% of revenues, was flat, or up 2% trading days adjusted.


In Germany, Austria, Switzerland, revenues were EUR 482m, down 9%, or down 10% trading days adjusted. In Germany & Austria, revenues declined 11%, or 12% trading days adjusted, driven by the market slowdown, regulatory changes and the consolidation of the Adecco and Tuja general staffing businesses. In Switzerland, revenues declined by 1%, or by 2% trading days adjusted, against a challenging prior year comparison base.


In Benelux and Nordics, revenues were EUR 466m, down 7%, or down 6% trading days adjusted. In the Nordics, revenues declined 1%, or 2% trading days adjusted, with growth in Norway offset by a decline in Sweden. Revenues in Benelux were down 11%, or down 10% trading days adjusted.


In Japan, revenues were EUR 343m, up 6%, or up 8% trading days adjusted, with good growth in professional staffing and permanent placement. EBITA was EUR 25 million and the EBITA margin was 7.4%, an increase of 20 bps year-on-year driven by business mix and productivity improvements.


In Iberia, revenues were EUR 264m, down 3%, or down 4% trading days adjusted. EBITA was EUR 14m. The EBITA margin increased 50 bps year-on-year to 5.1%, driven by positive pricing development and business mix, with good growth in perm and with SME clients. 


In Rest of World, revenues were EUR 661m, up 4%. Revenues grew 10% in Australia & New Zealand, 6% in Latin America, 3% in Asia, 5% in India and were flat in Eastern Europe & MENA, all trading days adjusted. For the region, EBITA excluding one-offs was EUR 21m with a margin of 3.3%, up 50 bps compared to last year’s EBITA margin, supported by a continued focus on client profitability.

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