Beating peers on revenue growth but profitability remains under pressure

Adecco reported Q2 figures that were broadly in line with the consensus estimates. Organic and TDA adjusted growth was ahead of its peers and was driven by strong growth in the Adecco business unit. The gross margin declined yoy and qoq due to an unfavourable mix. Consequently this also impacted the EBITA margin which declined by 40bp yoy. CFO was positive. For Q3, Adecco expects the gross margin to be similar to Q2, and the SG&A spend to be sequentially slightly lower.

Reasonable start to the year but profitability improvements will take time

Adecco’s Q1 figures delivered a marginal beat over consensus estimates across the board. Organic and TDA revenue growth was supported by Adecco and Akkodis. The gross margin improved yoy and qoq and the EBITA margin benefited from an earlier payment from the FESCO JV. SG&A spend was up yoy but broadly inline qoq. CFO was negative due to the timing around working capital. For Q2, Adecco expects the gross margin and SG&A spend to be broadly in line with Q1 23 levels.

Decent end to 2022; soft profitability also expected in 2023

Adecco’s Q4 results were decent across most areas except net income. Like in the Q3, revenue growth was supported by Adecco and Akkodis. The gross margin was flat qoq and the EBITA was impacted by the absence of special benefits and continued investment in the business. CFO was stronger due to working capital reversal and the board will propose a dividend of CHF2.50. For Q1 2023, the gross margin and SG&A expenses are expected to be broadly in line with their Q4 2022 levels.

Q3 profitability beats consensus; slowdown worries remain

Adecco’s Q3 results were in line with the consensus estimates on revenues, marginally below on gross profit and above them on EBITA, net income and organic growth. Revenue growth was supported by Adecco and Akkodis. The gross margin hardly budged and EBITA was affected primarily by higher investment in the business. CFO was lower due to reduced profits and a higher working capital requirement. For the Q4, the group expects the gross margin and SG&A expenses to be broadly in line with their Q3 20

Another profitability-impaired quarter; AKKA being integrated; margin hope pinned on H2

Adecco’s Q2 results were in line with consensus estimates on revenues, marginally above on gross profits but below on EBITA, net income and organic growth. While the gross margin was better, EBITA was once again affected by higher investments in the business and lower margins from LHH. CFO was negative due to one-off costs and increased working capital requirement. In Q3, Adecco expects solid yoy growth in revenues and, in H2, it expects a higher EBITA margin and CFO generation.

Soft start to 2022 to be overcome in H2

Adecco’s Q1 results were a mixed bag with revenues and gross profits ahead of consensus but the adjusted EBITA and net income below. Permanent Placement recorded another quarter of solid growth and was supported by good growth in Outsourcing and Consulting. Although some of this growth was offset by continued weakness in Career Transition. Regarding profitability, increased investments into the Adecco division affected margins. Going forward, the group expects the EBITA margin to improve sequent

Entering 2022 on a stable footing, Akkodis on track

Adecco released a decent set of results with revenues in line with consensus but profitability slightly above them. The revenue growth mainly came from Permanent Placement even as Flexible placement remained flat. The counter-cyclical Career Transition remained impacted. On the profitability side, the group benefited from the favourable mix and better pricing. Also, good cost control helped EBITA margins. For FY21, the board will propose a dividend of CHF2.50. Lastly, the AKKA acquisition remain

Q3 has a decent finish

Adecco’s Q3 results were broadly in line with consensus with profitability being slightly better than revenues. Permanent Placement recorded another strong quarter and the counter-cyclical Career Transition another weak one. Flexible Placement continued to recover but was also hindered by the automotive and electronic end-markets. Labour shortages were seen in hospitality and transport. Going forward, this is expected to continue, at least, for the short term. In terms of outlook, the group expe

A step towards better growth and margins?

This morning Adecco announced the acquisition of AKKA technologies, a key player in Engineering R&D services. AKKA will join forces with Modis to create a strong player in the emerging Smart Industry market. The former has its headquarters in Belgium and has about 20,000 employees. Adecco will pay €2.0bn (EV) for the transaction though cash and shares, and this transaction in expected to close in H1 21. Read on to find out more.

Q2 did better on profitability, acquisition announced

The acquisition of AKKA technologies led to a surprise Q2 announcement by Adecco. Revenues and gross profits matched expectations, whereas adjusted EBITA and net income were above both consensus and our estimates. This quarter clearly benefited from a low base of comparison but the recovery in Permanent placement was strong nonetheless. The group expects this momentum to carry forward into Q3. The acquisition is sizeable and we believe that it deserves its own comments.

Off to a decent start

Adecco’s Q1 revenues matched consensus estimates but were above those of AV’s. EBITA, however, decently beat consensus but was below our estimates. Altogether, the end of Q1 showed signs of revenue recovery and could mean well for the quarters ahead. Regarding profitability, the group continued to enforce pricing discipline and cost actions, which drove profitability upwards. Following this result, the group expects Q2 to improve sequentially while also benefiting from a lower base.

Better than expected Q4 but FY20 ends in the red

Adecco’s Q4 results showed a sequential improvement from Q2 onwards and were above our and consensus expectations. Revenues showed signs of recovery and continued demand from e-commerce, healthcare, etc., whereas margins were managed through the continued focus on pricing and cost actions. The group’s financial position remained solid, which allowed it to propose a dividend of CHF2.50 and restart its buy-back programme amounting to €600m. However, the group did not provide a clear FY21 outlook.

Leveraging the human touch to drive digitalisation

Adecco, at its CMD yesterday, unveiled the new Future@Work strategy, which will take the baton from the Perform, Transform and Innovate strategy ending in FY20. The group intends to capitalise on the mega-trends of increased demand for flexible working and the need for up- and re-skilling by making itself an end-to-end workforce partner, leveraging data to drive digitalisation. The group also revealed its new business unit structure and its individual strategies from FY21 onwards.

Good Q3 but an uncertain Q4 ahead

Adecco’s Q3 results were slightly above both AV’s and the consensus expectations on the back of improved business activity after a trough in the previous quarter. The ability to meet increased demand in growth areas (e-commerce, logistics), focus on pricing, a balanced business portfolio and cost management were behind this result. Additionally, Adecco’s balance sheet remains robust and the group continues to generate good cash flow. However, we remain cautious about Q4 due to the second COVID w

Q2 figures beat consensus and show a trough

Like its peers, Randstaad and Manpower, Adecco reported Q2 figures ahead of expectations, albeit slightly lower. Nevertheless, the company seems to have won market share in France, Spain and Italy. Costs remained under control, providing some support to the group’s profitability and margins. We are maintaining our current estimates and may revise them upwards if the Q3 confirms the positive trend seen in June and July.

Record next-generation award

Continued strong growth

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