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Adecco shares sink to 2-year low on revenue growth slowdown

posted onSeptember 20, 2018
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The world's largest staffing firm, Adecco, sank 6.17 percent on Wednesday (Sept.19) after saying it is seeing a slowdown in revenue growth so far in the third quarter. 

The Swiss firm's fall also weighed its Dutch peer Randstad down 5.1 percent. RBC Capital told Reuters Adecco's slowdown was bad news but added that the stock's valuation was cheap and that the company's endmarkets remained relatively robust.

Geopolitical concerns like a possible trade war with the United States have weighed on European economic growth.  

“Recent trading has been more challenging than expected, driven by continental Europe,” Chief Executive Alain Dehaze who took over at Adecco in 2015 said in a statement. 

Last month, Adecco reported revenue of €6,052 million in the second quarter. Organic revenue growth was 5%, or 4% with trading days adjusted. This is a slowdown from the 6% growth achieved in the first quarter with deceleration experienced in Italy, France, Iberia, and Benelux & Nordics, partly offset by an improved performance in North America, UK&I General Staffing. 

Net profit fell 11 percent to 170 million euros, just missing the average of 173 million in a Reuters poll of analysts. 

Both Amsterdam-based Randstad and US-based ManpowerGroup, Adecco’s largest staffing rivals, also reported slowdowns in revenue growth during the second quarter. 

 Dehaze commented on the second quarter results: “In the second quarter, underlying revenue growth decelerated modestly but remained solid at 4%, and the mix of growth became more balanced. To be noted, in France, our largest business, we significantly outperformed the market. In North America, General Staffing returned to growth, achieving its strongest performance since the second quarter of 2015.”

The Zurich-based company also moved forward its 150 million euro share buyback to the third quarter of this year from the originally planned fourth quarter, after selling a stake in a staffing software company. 

Adecco was founded in 1996. It has 33,000 full time employees and around 5,100 branches in over 60 countries and territories around the world.The company is listed on the SIX Swiss Exchange. The Swiss Market Index climbed 0.27 percent Wednesday and finished at 8,939.85. The Swiss Leader Index increased by 0.33 percent while the Swiss Performance Index advanced 0.21 percent.