When the 'good' news reads "revenues are starting to bottom out in Europe", you get a feeling of how tough things still remain in the recruitment market. Indeed, headline revenues for the 3 months to 31st March at Zurich-headquartered global staffing giant Adecco fell by 10% to €4.6bn (-8% constant currency), and gross margins slipped 20bps to 18.0%. Operating margins continue to shrink, with a 31% decline in operating profit leaving margins at 2.5% (Q1 2012: 3.3%). This is partly due to 'restructuring' cost, of which there is more to come.
Adecco's UK revenues were flat (€456m), though this belied a 26% drop in permanent recruitment fees, which therefore hit margins ('gross = net' on permie business), now at 1.8% (Q1 21012: 2.4%). UK IT recruitment revenues were also flat, which was better than for the group, where IT revenues were down 7%.
As mentioned at the start, management said Q2 was looking a little better, but Adecco has a steep hill to climb to reach its 5.5% operating margin target in 2015, especially if it is relying on a material recovery in permanent recruitment activity by then.