UPDATE 2-Adecco sees no early relief for Europe's job seekers

Tue Nov 6, 2012 6:13am EST

* Third quarter net profit 118 mln euros, vs 109 mln forecast in poll

* Revenues 5.279 bln vs average forecast of 5.259 bln

* No improvement in Europe until H2 2013 at the earliest

* Shares rise 3 pct, outperform sector

By Caroline Copley

ZURICH, Nov 6 (Reuters) - Adecco, the world's biggest staffing group, expects no improvement in Europe's job markets until late next year because businesses are reluctant to hire due to uncertainty about the euro zone debt crisis.

"It is going to be very slow in Europe into the beginning of next year and if something improves it is going to be in the second half but not before that," Chief Executive Patrick De Maeseneire told Reuters.

Adecco, which reported solid third quarter results on Tuesday, said revenue declines in the hardest-hit regions of Italy and Spain seemed to be stabilising, suggesting employers had already cut to the bone.

"The fact that revenues are not dropping off like they were in 2009 means that there are a lot of companies that are really stretched to the minimum," De Maeseneire said.

Unemployment in the euro zone rose to a record high in September, while a survey of manufacturing activity for the region - which acts as an indicator for economic growth - shrank for the 15th month in a row. [ID :nL5E8M2421]

Adecco's third-quarter revenues fell 5 percent organically to 5.279 billion euros ($6.75 billion), compared to a 4 percent fall in the second quarter. The company said it saw a further slowdown in sales at the start of the fourth quarter.

In Europe, Adecco's revenues fell an average of 8 percent in the quarter, the same decline as in the second quarter.

But the company painted a brighter picture for North America, where the pace of sales growth accelerated in the quarter to 3 percent organically, driven by the information technology sector. Adecco also said there were good indications that industrial manufacturing was holding up.

Since the financial crisis, companies have relied more on temporary staff to increase flexibility. The number of temps is considered a gauge of broader job market activity because employers add or cut them before hiring and firing permanent staff.

COST CONTROL

Adecco, which competes with Dutch group Randstad and U.S. rival Manpower Inc, has managed to weather the difficult economic climate by keeping tight control of costs.

The company's quarterly net profit fell 18 percent to 118 million euros, but this was ahead expectations for 109 million euros in a Reuters poll .

It achieved an earnings before interest, tax and appreciation (EBITA) margin of 4.4 percent in the third quarter, up from 3.7 percent in the second, which reflected its cost discipline. The company was still convinced it could reach a mid-term target for a core profit margin of more than 5.5 percent.

"The operating results emphasise once more the on-going cost control and pricing discipline," said Sarasin analyst Patrick Hasenboehler. "Today's result should support the share price, as it shows Adecco has its business under control."

By 0917 GMT, Adecco shares were up 2.9 percent at 46.47 francs, outperforming to a flat European industrial goods and service sector.

CEO De Maeseneire urged European politicians to implement labour market reform to reverse the industrial decline which has led to thousands of job losses.

Peugeot, a key Adecco client, plans to cut 8,000 jobs in France and close an assembly plant, while Ford Motor Co is scrapping some European plants affecting thousands of workers.

"Either we attract manufacturing and give a boost to all the industries that really recruit low-skilled people or we are going to have these high unemployment numbers for a long time, particularly in the southern parts of Europe," he said.

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