* Q2 net profit rises 15 pct to 145 mln euros
* Sales of 4.99 billion euros vs forecast of 5.07 bln
* Biggest market France continues to weigh on overall growth
* Confirms on track to meet mid-term EBITA margin target
* Shares fall 2.7 pct, underpeform sector
(Adds comments from CEO)
By Caroline Copley
ZURICH, Aug 7 Adecco, the world's
largest staffing company by sales, expects a modest economic
recovery to keep demand for temporary workers stable in Europe
as it reported a slight slowdown in underlying revenue growth in
the second quarter.
Employment agencies like Adecco and Dutch rival Randstad
are seen as barometers for economic health since
companies tend to hire temporary workers at the start of a
recovery when they are reluctant to commit to full-time hiring.
In Europe, Italy and Iberia were bright spots for Adecco in
terms of revenues in the quarter, while in France, the company's
biggest market, sales were flat.
Adecco's Chief Executive Patrick De Maeseneire said it was
hard to gauge how hiring would develop over the rest of the year
but he expected moderate economic growth to support a pick-up in
"If we listen to our clients, we have no reason to believe
there will be a change. But with all that's going on in the
world there is also no broad optimism at the moment," he told
Reuters in an interview.
He said uncertainty over the Ukraine crisis had not impacted
Adecco's business in the country and neighbouring Russia so far,
and he did not expect it to materially weigh on sentiment among
The Swiss company's underlying revenues, excluding currency
moves, rose 5 percent in the second quarter to 4.99 billion
euros ($6.7 billion), falling slightly shy of the average
analyst forecast for 5.07 billion in a Reuters poll.
This was slightly below the 6 percent growth seen in the
first quarter, but above 4 percent seen in the final three
months of last year. Revenue growth in July was between 5 and 6
percent, Adecco said.
Shares in Adecco, which have shed over 7 percent of their
value so far this year, were trading down 2.7 percent at 63.60
francs by 0745 GMT. The Swiss industrial goods and services
sector was down 0.4 percent.
"Adecco continues to deliver solid performance even though
organic growth is not yet in high-single digit range foreseen
for full-year 2014," Vontobel analyst Michael Foeth, who rates
the stock "buy," said.
J. Safra Sarasin analyst Dominik Studer said he considered
the recent share price weakness as a buying opportunity since
demand for flexible labour should increase over the rest of the
In Adecco's biggest market, France, which has lagged a
recovery in other European countries, revenues were flat in the
quarter compared to a rise of 1 percent in the first quarter.
This chimes with U.S. rival ManpowerGroup Inc, which
said last month a weak performance in France had dragged on its
revenue growth in the second quarter.
But elsewhere on the continent busy factories helped support
"If we exclude France, continental Europe is up 10 percent
and it's all driven by industrial which is the early cyclical
business," De Maeseneire said.
A particular strong point was Italy, despite entering
recession in the second quarter, where revenues jumped 18
percent. Iberia also notched up growth of 21 percent, driven by
These markets are benefiting from labour market reforms
during the financial crisis, which make it easier and more
acceptable to hire temporary workers, Adecco said.
De Maeseneire said its strategy remained to focus on organic
growth, but added the company was considering smaller, bolt-on
acquisitions to enhance its technology.
Quarterly net profit rose 15 percent to 145 million euros,
in line with the analyst consensus.
Adecco confirmed its target for earnings before income tax
and amortisation (EBITA) margin to represent more than 5.5
percent of revenue by 2015. It had an EBITA margin excluding
restructuring costs of 4.6 percent in the quarter.
(1 US dollar = 0.7476 euro)
(Editing by Miral Fahmy and Jane Merriman)