Adecco 2Q profit rises as oil prices spur hiring
Adecco SA, the world's largest provider of temporary workers, posted a smaller-thanestimated rise in second- quarter profit as growth in North America cooled amid a slowdown in the oil industry.
Net income increased 22 percent to 177 million euros ($194 million), the Glattbrugg, Switzerland-based company said in a statement Tuesday. Analysts predicted 182.6 million euros, the average of five estimates compiled by Bloomberg.
Adecco is a bellwether for the economy as companies add temporary staff and use recruitment services when prospects are brighter.
Lower oil prices are helping growth in Europe, spurring companies there to hire workers, yet they are exerting pressure on the No. 2 market of North America, particularly Canada.
"The lower euro and lower energy costs, which have removed a handicap to Europe compared to the U.S., are for sure helping export- orientated companies," Chief Executive Officer Patrick De Maeseneire, who's leaving the company at the end of the month, said in a telephone interview.
Second-quarter revenue in Adecco's main market, France, rose 2 percent excluding currency swings, acquisitions and divestitures. Sales in North America also increased 2 percent, slowing from the 4 percent rise in the first quarter.
"I'm not worried U.S. revenue will go into negative territory, but we do see that the engineering business is under pressure," he said. "In Canada we are exposed to the oil business. In the U.S. it's mainly that capital investments are not there." Adecco dropped 2.8 percent to 79.95 Swiss francs at 10:25 a.m. in Zurich.
"Adecco's growth is progressing steadily but yet at a modest pace," Michael Foeth, an analyst at Vontobel in Zurich, wrote in a note to clients. He has a hold rating on the stock.
Revenue climbed 4 percent organically to 5.58 billion euros, versus an average estimate of 5.56 billion euros.
Earnings before interest, taxes and amortization rose 10 percent to 272 million euros excluding one-off items and the impact of currency swings, acquisitions and divestitures.
Adecco confirmed its target for an Ebita margin exceeding 5.5 percent of sales this year, dependent on revenue growth in the second half.