It is a sad sign of the times when a recruitment company reports improved margins mainly due to a boost in its outplacement services. But such is the case for Zurich-headquartered global staffing giant Adecco, for which otherwise, half-time results (to 30th June) were rather muted. Headline revenues fell by 7% to €9.5bn (-6% constant currency), but gross margins improved 10bps to 18.0% as Adecco helped its clients shed staff. However, gross profits fell 7% in absolute terms. Operating profits fell 10% trimming margins by 10bps to 3.2%.
The UK was Adecco’s best performing major region, managing a 2% revenue increase (constant currency) to €925m. Operating margins improved by 30bps to 1.8%. Adecco’s IT recruitment revenues fell by 7% to €1.1bn though were flat organically (sounds like a less than successful acquisition in there somewhere!). UK IT revenues grew by 2%.
Management reiterated its view that European labour markets were stabilising (see Adecco sees 'bottoming out' in Europe) and felt ‘convinced’ the company would reach its 5.5% EBITA target (currently 3.4%) by 2015. This would mainly depend on a margin recovery in France (3.0%) and North America (4.4%), which jointly account for over 40% of Adecco’s revenues. I’d guess more chance for the latter than the former.