(1888PressRelease)
May 25, 2009 - Adecco Group, the worldwide leader in Human Resource services, announced results for the first quarter of 2009. Revenues were down 28% organically to EUR 3.7 billion compared to EUR 5.0 billion in Q1 2008. The gross margin was up 40 bps to 18.5%. SG&A on an adjusted and organic basis was reduced by 15% in Q1 2009 compared to the prior year, as a result of headcount reductions and branch network optimization. The reported EBITA margin was 1.2%, or adjusted for EUR 36 million restructuring costs 2.1%, down 220 bps. Operating cash flow was EUR 205 million.
Dominik de Daniel, CFO of the Adecco Group said: "We continued to face strong pressure on revenues, with an organic decline of 28% in the first quarter this year. Nonetheless, I am pleased to report that we were able to increase the gross margin by 40 bps to 18.5%, due to the good business mix. Given our proactive and accelerated approach to adapt the cost base in order to protect margins, SG&A was reduced by 15% on an adjusted and organic basis in Q1 2009, compared to the prior year's first quarter. The EBITA margin was down 220 bps to 2.1%, when excluding restructuring expenses. Operating cash flow of EUR 205 million was strong, helped by lower working capital needs."
Q1 2009 FINANCIAL PERFORMANCE
Revenues
Group revenues in Q1 2009 were down 26% to EUR 3.7 billion compared to Q1 2008. Organically, revenues declined by 28%. In the first quarter of 2009, permanent placement revenues were EUR 53 million, a decline of 45% in constant currency and outplacement revenues amounted to EUR 88 million, an increase of 65% in constant currency.
Gross Profit
The gross margin improved by 40 bps to 18.5% compared to Q1 2008. The gross margin in the temporary staffing business was 50 bps lower in Q1 2009 compared to Q1 2008, partly due to lower utilisation in Germany and Sweden, where temporary employees are on Adecco's payroll, while the decline in the permanent placement business also impacted gross margin negatively. The growing contribution of the outplacement business more than compensated the negative impact on the gross margin of the temporary and permanent staffing businesses.
Selling, General and Administrative Expenses (SG&A)
In Q1 2009 SG&A was reduced by 7% compared to the same period last year. Organically and adjusted for EUR 36 million restructuring expenses, SG&A declined by 15%. Organically, FTE employees were reduced by 12% (-4,600) compared to Q1 2008, while the branch network was reduced by 11% (-700 branches). At the end of the first quarter of 2009, the Adecco Group operated a network of over 6,000 offices with more than 31,000 FTE employees.
EBITA
In the period under review, reported EBITA was EUR 43 million, a decline of 80%. Organically and adjusted for EUR 36 million restructuring expenses, EBITA declined by 66% to EUR 79 million. The adjusted EBITA margin was 2.1% in Q1 2009. This compares to an EBITA margin of 4.3% in the prior year.
Amortisation of Intangible Assets
Amortisation in Q1 2009 amounted to EUR 13 million compared to EUR 10 million in first quarter of 2008.
Operating Income
In Q1 2009, the company reported operating income of EUR 30 million, a decline of 85%, which compares to EUR 205 million in Q1 2008.
Interest Expense and Other Income / (Expenses), net
The interest expense amounted to EUR 9 million in the period under review, EUR 5 million less than in Q1 2008. Given the recent bond issuance of EUR 500 million, the interest expense is expected to amount to approximately EUR 60 million for the full year of 2009. Other income / (expenses), net was EUR 3 million in Q1 2009 compared to EUR 2 million in the first quarter of 2008.
Provision for Income Taxes
The effective tax rate for the first quarter of 2009 was 3%, compared to 28% in the same period last year. The tax rate for Q1 2009 was lower due to the favourable settlement of tax audits and expiration of statute of limitations in certain jurisdictions.
Net Income attributable to Adecco shareholders and EPS
Net income attributable to Adecco shareholders in Q1 2009 was down 83% to EUR 23 million compared to EUR 137 million in Q1 2008, resulting in a margin of 0.6%. Basic EPS was EUR 0.13 (EUR 0.78 for Q1 2008).
Balance Sheet, Cash flow, and Net Debt
The operating cash flow generated in Q1 2009 amounted to EUR 205 million. The Group invested EUR 26 million in capex. Net debt declined to EUR 445 million at the end of March 2009 compared to EUR 617 million at the end of 2008. DSO improved by 2 days to 55 days in the first quarter of 2009.
Currency Impact
In Q1 2009, currency fluctuations had a positive impact of approximately 1% on revenues and on operating income.
About the Adecco Group
The Adecco Group, based in Zurich, Switzerland, is the world's leading provider of HR solutions. With over 31,000 FTE employees and 6,000 offices, in more than 60 countries and territories around the world, Adecco Group offers a wide variety of services, connecting more than 500,000 colleagues with over 145,000 clients every day. The services offered fall into the broad categories of temporary staffing, permanent placement, outsourcing, consulting and outplacement. The Adecco Group is a Fortune Global 500 company.
Adecco S.A. is registered in Switzerland (ISIN: CH0012138605) with listings on the SIX Swiss Exchange (ADEN) and on Euronext in France (ADE).
Adecco Corporate Investor Relations
Investor.relations ( @ ) adecco dot com or +41 (0) 44 878 89 89
Adecco Corporate Press Office
Press.office ( @ ) adecco dot com or +41 (0) 44 878 87 87
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