Global uncertainty hits Adecco
Drop in demand for workers weighs on staffing group’s revenues as companies exercise caution around hiring
Adecco Group, the world’s biggest staffing group, said hiring has slowed since the start of the fourth quarter, confirming a weaker trend as economic uncertainty makes companies more cautious.
The Swiss company’s results are closely watched for clues about the health of the broader global economy. On Tuesday it said a fall in demand for car industry workers along with a slowdown in manufacturing and retail jobs in Europe weighed on its revenues, which grew just 1% in SeptemberOctober from a year earlier.
For the July-September quarter, revenue growth when adjusted for trading days and currency changes halved to 2%, from 4% in the second quarter, it said.
The company said the situation reflects earlier comments about tough markets in Europe and that sales from placing office and blue-collar workers in the US and Britain were flat in the three months to September 30.
“In September we said we didn’t see the growth picking up after the summer period the growth we saw is not coming back,” CFO Hans Ploos van Amstel said.
Rivals Randstad and ManpowerGroup have also reported slowing revenue growth during their third quarter, reflecting greater caution among firms in adding to their work forces.
Adecco said revenues in Germany, Austria and Switzerland, along with the Benelux countries and Scandinavia, fell in the third quarter.
Ploos van Amstel said southern Europe is “levelling off” after strong growth over the past few years, but described the group’s overall situation as “positive stability”, adding conditions did not worsen during October. Adecco shares have fallen nearly 36% in 2018, but gained 3.1% on Tuesday after its results.
“We believe that the share of Adecco has anticipated a lot of the current economic downturn that will impact the company’s profitability,” said Baader Helvea analyst Christian Weiz.
The eurozone economy grew at its weakest pace in more than four years during the third quarter as the public mood darkened, with signs of economic distress in Italy highlighting concerns that the bloc’s third-ranked state is becoming one of its weakest links.
Adecco CEO Alain Dehaze said trade tensions between the US and China have not hit hiring intentions, at least not yet.
“At this stage we do not see any impact,” he said. “In general it takes time to see a potential impact given the manufacturing process takes rather a long time until new goods are imported and exported.”
Adecco said that quarterly revenue rose to €5.99bn, matching estimates in a Reuters poll of analysts.
Net profit increased to €270m, beating forecasts for €221m as the company succeeded in cutting costs.
Earnings were also boosted by €113m gained from Adecco’s sale of its stake in staffing software company Beeline.