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Aug 7, 2014

Adecco expects steady demand for temps in Europe

Numbers good, but CEO says 'no broad optimism at the moment'
By Caroline Copley/Reuters
    
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ZURICH (Reuters) — 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 temporary hiring.

"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 neighboring Russia so far, and he did not expect it to materially weigh on sentiment among Adecco's clients.

The Swiss company's underlying revenues, excluding currency moves, rose five per cent in the second quarter to 4.99 billion euros (US$6.7 billion), falling slightly shy of the average analyst forecast for 5.07 billion in a Reuters poll.

This was slightly below the six per cent growth seen in the first quarter, but above four per cent seen in the final three months of last year. Revenue growth in July was between five and six per cent, Adecco said.

FRENCH DRAG

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 one per cent 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 growth.

"If we exclude France, continental Europe is up 10 per cent 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 per cent. Iberia also notched up growth of 21 per cent, driven by export-orientated clients.

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.

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