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The Adecco Group (ADEN:VTX), reported revenue today of €5.44 billion during the first quarter ended 31 March 2022, an increase of 5% organically and trading days adjusted.
Revenue growth was an increase from the previous quarter’s revenue growth of 1% organically and trading days adjusted. The quarterly revenue of €5.45 billion was ahead of Reuters analysts’ forecasts of €5.38 billion. However, it was well below the 15% organic increase achieved by peer Randstad announced on 26 April.
On 28 July 2021, the Adecco Group announced it had acquired 59.91% of the shares issued by AKKA Technologies. Modis, the group’s high-tech services business combined with AKKA to become Akkodis.
Annual revenue growth on an organic and trading days adjusted basis in the first quarter was led by Akkodis (+14%), LHH Recruitment Solutions (+15%) and Adecco APAC (+15%).
Alain Dehaze, Adecco Group CEO, said, “With a concerted focus on gaining market share, the group delivered improved growth this quarter. The targeted investment in headcount that we have deployed in Adecco is showing results, with notable improvement in several key regions, and LHH Recruitment Solutions continued to capture the strong market demand. The group also delivered strong progress on gross margin through portfolio changes, favourable mix, and pricing actions.”
The Adecco Group also announced today separately that, following a carefully planned succession process, it has named Denis Machuel as its new CEO to succeed Alain Dehaze on 1 July 2022. The transition will take place following a month-long handover period during June.
Gross margin growth was driven by portfolio shift, business mix and pricing.
EBITA excluding one-offs was €185 million, compared to EUR 207 million in the prior period.
Adecco Group’s net income fell 26% to €92 million, weaker than Reuters forecasts. The result reflects lower operating income, interest expense of €10 million, and other income/(expenses), net of €8 million, including charges for early redemption of AKKA debts.
Revenue by Segment
Unless otherwise noted, all growth rates in this section are set against the same period in the prior year, with revenues stated on an organic and trading days adjusted basis.
Regionally, revenue growth was led by APAC, Southern Europe & EEMENA and France, while the DACH region was robust.
In Adecco France, revenue growth was strong, with quarter-end growth rates above market levels. Manufacturing, consumer and retail sectors were particularly dynamic. Demand was softer in energy, logistics and autos.
In Adecco Northern Europe, revenue from UK & Ireland was 19% lower, considering a tough comparison period from exceptional contract wins in logistics in the prior period, and which concluded in Q3 2021. Excluding this impact, revenues from the region were 4% higher. In the Nordics, revenues were up 9% while in Benelux, revenues were flat.
In Adecco DACH, revenue in Germany was 1% better, supported by strong activity across retail, manufacturing and chemical sectors, while Switzerland & Austria grew 8%. Performance in Germany was hampered by continued rebalancing in the logistics sector, without which growth would have been up in double-digit terms, and further headwinds in autos.
In Adecco Southern Europe & EEMENA, strong revenue growth reflected 15% growth in Italy and 7% growth in Iberia, while EEMENA was 13% lower. Growth was led by manufacturing, consulting and Food & Beverage sectors, partly mitigated by a tough comparison in logistics, particularly in EEMENA.
In Adecco Americas, Latin America revenue was 4% lower, due to legislative change in Mexico having a negative impact. At the same time, revenue grew in very strong double digit terms excluding Mexico. In North America, revenue was 8% lower.
In Adecco APAC, the group’s region reported broad-based and very strong revenue growth at 15%, boosted by strong demand for Outsourcing and Permanent Placement activities. Flexible Placement was also strong, particularly in Australia and Japan, and, on a sector basis, in logistics and healthcare.
Within LHH, Recruitment Solutions (up 15%) performed particularly well, securing strong returns from prior investments in sales capacity and benefiting from a dynamic trading environment.
Career Transition & Mobility revenues were 35% lower, due to ongoing weakness in outplacement demand stemming from the strength of the economy, primarily in the US and France. Learning & Development was robust (+3%) as strength in Talent Development and executive coaching brand Ezra was partially offset by coding bootcamp General Assembly, which was hurt by weaker B2B market trends. Pontoon’s MSP and RXO solutions, as well as Hired, the group’s hiring platform, performed strongly in the quarter (+11%).
Akkodis’ revenue was up 14%. By region, Modis Americas was up 19%, EMEA up 12% and APAC up 9%. Growth in the Americas and EMEA was driven by Talent Services, while APAC, particularly Japan, benefited from its continued focus on Consulting.
Revenue by Service Line
On the appointment of Machuel as CEO, Jean-Christophe Deslarzes, Chair of the Adecco Group, said, “After a robust search and a thorough selection process, the Board is convinced that Denis is the right CEO for the Group’s next chapter. Denis is both a values-oriented and highly execution-driven leader. He knows how to nurture a culture of performance excellence, has a strong track record of growth and value creation, and brings relevant industry experience. The Board is committed to strategic continuity through the existing Future@Work strategy cycle, with a clear Management mandate of exceptional execution and growth acceleration.”
Deslarzes continued, “Together with my Board colleagues, I would like to deeply thank Alain for his leadership during his almost-seven years as CEO. Alain put purpose at the heart of the company and has positioned the group as a globally-leading talent partner. The development of the Future@Work strategy, establishment of the three-Global Business Unit structure, his oversight of key acquisitions and divestitures to strengthen the portfolio, and digital transformation work, have laid the strong foundations for a very bright future. I have personally sincerely appreciated our excellent collaboration during my time as Chair and thank Alain very much on behalf of the Company’s 38,000 employees for his strong commitment to the Adecco Group.”
Dehaze said, “It has been an honour and joy to lead the Adecco Group as CEO, and I am proud of what we have accomplished together over the years. Today the group has a strengthened and differentiated portfolio, two three globally-leading Business Units – Adecco, LHH and Akkodis, a solid financial position, and a diverse and valuesoriented team who are deeply committed to our success.”
Machuel was most recently Group CEO of Sodexo, a provider of outsourced food service operations and integrated facilities management services including prison management, reception, concierge, cleaning, pantry, laundry, groundskeeping, and waste management, with more than 400,000 employees in 56 countries.
Looking ahead, the group said its trading momentum indicates healthy demand for talent services, ‘in a talent scarce and wage inflationary environment’, while recognising the challenges from the war in Ukraine and continued Covid-related global supply chain issues.
The group expects its year-on-year revenue growth rate to improve in Q2 when compared to Q1 2022’s result, driven by growth investments. EBITA margin is expected to improve sequentially, while being lower year-on-year, reflecting agile investment, particularly in Adecco.
Shares in Adecco Group last traded at CHF 37.07 (€35.84), down 3.74% on the day and 3.26% above its 52-week low of CHF 35.90 (€34.71), set on 7 March 2022. The company has a market cap of CHF 6.54 billion (€6.32 billion).
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