September 19, 2018 / 6:02 AM / a month ago

UPDATE 2-Adecco shares tumble on slowdown in European hiring growth

* Revenue growth rate drops in July, August

* Recent trading more challenging than expected-CEO

* Shares down nearly 5 percent (Adds CEO comments, analysts)

By John Revill

ZURICH, Sept 19 (Reuters) - Adecco Group’s shares fell to their lowest level in two years on Wednesday after the world’s largest staffing company signalled a slowdown in European hiring growth.

The Swiss company said its revenues increased by 2 percent in July and August excluding the effect of currency swings and a different number of trading days - half the rate during the three months to the end of June.

Volume trends had declined further in early September at the start of its third quarter, Adecco said in a trading update issued to coincide with its investor day in London.

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

“We are already taking the appropriate measures to adjust our costs to reflect this lower growth environment. Our commitment to the group’s transformation and digitisation remains unchanged,” he added.

The performance of staffing companies like Adecco is keenly watched as an indicator of broader economic health. Companies tend to take on temporary staff at the beginning of a recovery and employ more workers when they feel confident about future prospects.

Earlier this year, Adecco said rising global trade tensions and slowing economic growth were not yet reducing companies’ desire to hire temporary staff.

Adecco’s stock dropped 4.8 percent to 59.9 Swiss francs, the lowest level since September 2016.

The slowdown also triggered a sell-off at Adecco’s Dutch rival Randstad, which lost 3.7 percent.

Sales in Germany were hurt by the merger of its Adecco and Tuja general staffing brands, the company said.

In France, the company’s biggest market, Adecco was outperforming rivals and gaining share, Dehaze told analysts.

Adecco’s slowdown came after it reported 4 percent revenue growth in the second quarter, and a 6 percent increase in revenues during the first three months of the year.

The company’s slowdown comes despite robust economic growth in the European Union this year. EU GDP rose by 2.1 percent, year on year, in the second quarter, following a 2.3 percent rise at the start of the year.

“This was a disappointing development,” a Zurich-based trader said. “The economy is doing well and Adecco is not profiting from it. The scale of the slowdown I didn’t expect at all.” (Reporting by John Revill, additional reporting by Brenna Hughes-Neghaiwi and Rupert Pretterklieber; Editing by Maria Sheahan, Michael Shields and Adrian Croft)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below