Zurich (awp) – Adecco had a turbulent session on Tuesday on the Zurich Stock Exchange, with the stock plunging in the wake of disappointing third quarter results. Faced with the weakness of certain markets, including its main France, the personnel placement giant has raised its savings objective.
The multinational boasted a “robust performance in difficult markets” in the third quarter, ensuring that volumes then stabilized in October. Its chief financial officer, Coram Williams, stressed on the sidelines of the publication of the results that it had gained market share against Dutch competitors Randstad and American Manpower.
Investors had difficulty digesting the decline in key figures between July and September, after already struggling for two quarters. Revenue fell 4% to 5.7 billion euros (5.4 billion Swiss francs). Organic growth was negative at -5%. However, this performance is considered “solid given the market conditions and the high basis of comparison”.
Weight of uncertainties in France
The Adecco brand, which totaled 4.4 billion euros in revenue (-4%), struggled in France. Across Jura, it totaled revenues of 1.15 billion, down 8%, penalized by economic and political uncertainties, following the early legislative elections and the late appointment of a new Prime Minister. “Logistics, manufacturing and healthcare in particular have been under pressure.” On-site management continues to “resize the activity”.
The situation was also difficult in the United States, with the Americas region seeing its turnover drop by 10%. The Switzerland, Germany and Austria region suffered (-5%) to 415 million, but less than Northern Europe (-8%). Only the Southern and Eastern Europe, Middle East and North Africa zone grew by 3% and Asia-Pacific by 1%.
Adecco failed to improve its gross margin in the third partial, stagnating at 19.4%, despite its promise of an improvement in this criterion made in the second partial. Coram Williams explained the phenomenon by the fact that “countries with lower margins are currently growing faster than countries with higher margin potentials, an effect that ripples across the margin.”
Automotive sector at half mast
On an organic basis this time, income from temporary placement declined by 3.5% and that from permanent placement by 2.5%. In end markets, “growth was strong in retail and logistics was stable, although weaker sequentially.” Demand was lower in the automotive sector and remained contained in the manufacturing industry.
The revenues of the Akkodis divisions, specializing in engineering, IT, research and development consulting, declined by 4% and those of LHH, which offers mobility and professional support services, by 5%.
On the profitability side, gross operating profit (Ebita) excluding one-off effects fell by 21% to 186 million, for a corresponding margin of 3.3%, down 70 basis points. Net profit fell by 4% to 99 million.
These figures are all, with the exception of the adjusted Ebita margin, below the most pessimistic forecasts of the analysts consulted for the AWP consensus.
Management is counting on a business performance in the last half similar to that of the third. The savings target is raised to 171 million euros for 2024, compared to 150 million previously.
Vontobel noted that cash flow was not as high as expected. The short-term outlook remains moderate, according to its analyst while recommending the stock to “buy”. The Zurich Cantonal Bank also considered that the cash flows were disappointing, but noted that according to the group, the missing flows would be present in the last quarter. The ZKB recommends “overweighting”.
At the close of the Swiss Stock Exchange, the shares of the Zurich temporary employment specialist lost 5.93% to 25.40 Swiss francs, the bottom of the SLI index, up 0.05%. At the start of the year, the stock was still worth more than 38 Swiss francs, before beginning a clear decline.
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