Adecco continues to see an improving revenue trend

 
TIDM0LAT 
 
Q4 2009 gross margin held up well sequentially as a result of strong price 
discipline 
 
 
FY 2009 HIGHLIGHTS (2009 versus 2008) 
 
  * Revenues of EUR 14.8 billion, down 26% (-27% organically[1]) 
  * Gross margin held up well, down only 20 bps to 17.8% on an adjusted[2] 
    basis 
  * Strong organic and adjusted SG&A reduction of -19% 
  * EBITA[3] margin down 180 bps to 2.7% on an adjusted basis 
  * DSO improved by 4 days to 53 days 
  * Proposed dividend of CHF 0.75 per share 
 
Q4 HIGHLIGHTS (Q4 2009 versus Q4 2008) 
 
  * Revenues of EUR 3.8 billion, down 18% (-18% organically) 
  * Adjusted gross margin down 60 bps to 17.4% 
  * SG&A down 18%, adjusted and organically 
  * Adjusted EBITA margin at 2.9%, down 70 bps 
  * DSO improved by 4 days to 52 days 
 
 
Key figures 
+--------------------------+--------+--------+----------------+----------------+ 
|                          | FY 2009| Q4 2009|         FY 2009|         Q4 2009| 
|                          |reported|reported|          growth|          growth| 
|in EUR millions           |        |        |adjusted/organic|adjusted/organic| 
+--------------------------+--------+--------+----------------+----------------+ 
|                          |        |        |                |                | 
|Revenues                  |  14,797|   3,785|            -27%|            -18%| 
+--------------------------+--------+--------+----------------+----------------+ 
|Gross profit              |   2,649|     665|            -29%|            -21%| 
+--------------------------+--------+--------+----------------+----------------+ 
|EBITA                     |     299|      89|            -57%|            -33%| 
+--------------------------+--------+--------+----------------+----------------+ 
|Operating income          |      65|      81|                |                | 
+--------------------------+--------+--------+----------------+----------------+ 
|Net income attributable to|       8|      42|                |                | 
|Adecco shareholders       |        |        |                |                | 
+--------------------------+--------+--------+----------------+----------------+ 
 
Zurich, Switzerland, March 3, 2010: Adecco Group, the worldwide leader in Human 
Resource services, today announced results for the full year and the fourth 
quarter of 2009. Revenues in 2009 were down 26%, or down 27% organically, to EUR 
14.8 billion compared to EUR 20.0 billion in 2008. Gross margin held up well and 
was only down 20 bps to 17.8% on an adjusted basis. Rigorous cost management led 
to a strong organic SG&A reduction of 19%, on an adjusted basis. The 2009 
adjusted EBITA margin was 2.7% compared to 4.5% a year ago. DSO improved by 4 
days to 53 days in 2009. 
 
Patrick De Maeseneire, Chief Executive Officer of the Adecco Group said:"The 
year 2009 has been exceptionally tough, but I am pleased to say that we have 
managed the downturn very proactively. We made the necessary cost reductions and 
structurally changed our branch network and delivery models. Our pricing 
discipline and our well-balanced service portfolio have led to an adjusted gross 
margin that was only down 20 bps to 17.8%. In the fourth quarter, trading 
conditions continued to improve in our major markets France and North America, 
but also in most other geographies we saw positive momentum. This positive trend 
continued into the first two months of the year, with France and North America 
returning to year-on-year growth in recent weeks. The substantially lower SG&A 
base, our disciplined pricing and the higher professional staffing exposure, 
will let us fully profit from the upturn." 
 
 
FY 2009 FINANCIAL PERFORMANCE 
 
Revenues 
Group revenues for 2009 were EUR 14.8 billion, a decline of 26% compared to the 
prior year. Organically revenues were down by 27%. Permanent placement revenues 
amounted to EUR 178 million, a decline of 49% compared to 2008, while 
outplacement revenues totalled EUR 298 million, an increase of 39%, both in 
constant currency. 
 
Gross Profit 
In 2009, the gross margin was 17.9% compared to 18.4% in the prior year. On an 
adjusted basis, the gross margin was 17.8%, a decline of 20 bps compared to the 
adjusted 2008 gross margin of 18.0%. 
 
Selling, General and Administrative Expenses (SG&A) 
SG&A declined by 15% in 2009 compared to the prior year. On an adjusted basis 
and organically, SG&A declined by 19% compared to 2008. At year end 2009 the 
Adecco Group hadover 28,000 FTE employees worldwide, while operating a network 
of over 5,500 offices. Compared to year end 2008, FTE employees were down 20% on 
an organic basis, while branches were reduced by 16% organically. 
 
EBITA 
In 2009, EBITA amounted to EUR 299 million, a decline of 67% and down 57% 
adjusted and organically compared to 2008. The adjusted EBITA margin was down 
180 bps to 2.7% compared to the adjusted EBITA margin of 4.5% in the prior year. 
 
Amortisation and Impairment of Goodwill and Intangible Assets 
Amortisation was EUR 42 million in 2009, compared to EUR 44 million in 2008. In 
addition, the company recorded an impairment of EUR 192 million on goodwill and 
intangible assets in Q2 2009. This includes a EUR 125 million goodwill 
impairment charge in Germany and EUR 67 million impairment on intangible assets, 
mainly for Tuja in Germany. 
 
Operating Income 
Operating income in 2009 was EUR 65 million, down 91% compared to 2008, also 
negatively impacted by the higher impairment charges on goodwill and intangible 
assets. 
 
Interest Expense and Other Income / (Expenses), net 
Interest expense was EUR 55 million in the period under review, which compares 
to EUR 58 million in 2008. Other income / (expenses), net was an expense of EUR 
1 million in 2009 compared to income of EUR 19 million in 2008. Interest expense 
is expected to be around EUR 65 million for the full year 2010. 
 
Provision for Income Taxes 
The effective tax rate for 2009 was 5% compared to 30% in 2008. The 2009 
effective tax rate was positively impacted by a change in the mix of earnings. 
 
Net Income attributable to Adecco shareholders and EPS 
In 2009, net income attributable to Adecco shareholders was down 98% to EUR 8 
million (2008: EUR 495 million). Basic EPS wasEUR 0.04 (EUR 2.82 in 2008). 
 
Cash-flow, Net Debt[4] and DSO 
Operating cash flow amounted to EUR 477 million in 2009. The Group invested EUR 
152 million in various acquisitions and spent EUR 91 million in capex in 2009. 
Additionally, in 2009, in connection with the placement of a three-year CHF 900 
million mandatory convertible bond, the Group completed a prepaid forward sale 
of Adecco S.A. shares resulting in a EUR 587 million cash inflow and purchased a 
call spread option on Adecco S.A. shares for EUR 108 million. Dividends paid 
were EUR 173 million in 2009. Net debt at the end of December 2009 was EUR 110 
million compared to EUR 617 million at the year end of 2008. In 2009, DSO 
improved by 4 days to 53 days compared with 2008. 
 
Currency Impact 
Currency fluctuations had only a minor impact on revenues and operating income 
in 2009. 
 
 
Q4 2009 FINANCIAL PERFORMANCE 
 
Revenues 
Group revenues in Q4 2009 were down 18% to EUR 3.8 billion compared to Q4 2008. 
On a constant currency basis, revenues declined by 16% and were down 18% 
organically. In the fourth quarter of 2009, permanent placement revenues 
totalled EUR 41 million, a decline of 39%, while outplacement revenues amounted 
to EUR 61 million, up 5%, both in constant currency. 
 
Gross Profit 
In Q4 2009, the gross margin was 17.6%. The adjusted gross margin was 17.4%, 
equal to the third quarter of 2009 and compared to an 18.0% adjusted gross 
margin in the same period last year. The temporary staffing business negatively 
impacted the gross margin by 60 bps in Q4 2009, mitigated by better utilisation 
rates in Germany and Sweden, while the decline of the permanent placement 
business had a negative impact on gross margin of 30 bps. This was only 
partially compensated by the 20 bps contribution of the outplacement business 
and by the 10 bps contribution from other activities. 
 
Selling, General and Administrative Expenses (SG&A) 
SG&A in Q4 2009 was down 20% compared to the same period last year. Organically 
and adjusted SG&A declinedby 18%. Restructuring costs totalled EUR 30 million in 
Q4 2009. The consolidation of Spring Group added EUR 9 million to SG&A and costs 
related to the recent acquisitions totalled EUR 4 million in the period under 
review. FTE employees, on an organic basis, declined by 21% (-7,200) when 
comparing to the same quarter last year, while the branch network was reduced by 
16% (-1,000 branches). 
 
EBITA 
In the period under review, EBITA was EUR 89 million, a decrease of 28% or33% 
organically and adjusted. The resulting adjusted EBITA margin was 2.9% in Q4 
2009. This compares to an adjusted EBITA margin of 3.6% in the prior year. 
 
Amortisation of Intangible Assets 
Amortisation in Q4 2009 was EUR 8 million compared to EUR 12 million in the same 
quarter last year. 
 
Operating Income 
In Q4 2009, operating income was EUR 81 million. This compares to an operating 
loss of EUR 5 million in the fourth quarter of the prior year, primarily as a 
result of impairment charges to goodwill and intangible assets of EUR 116 
million in Q4 2008. 
 
Interest Expense and Other Income / (Expenses), net 
The interest expense amounted to EUR 14 million in the period under review, EUR 
1 million higher than in Q4 2008. Other income / (expenses), net was an expense 
of EUR 4 million in Q4 2009 compared to income of EUR 8 million in the fourth 
quarter of 2008. 
 
Net Income attributable to Adecco shareholders and EPS 
In the period under review, net income attributable to Adecco shareholders was 
EUR 42 million. This compares to a loss of EUR 22 million in the prior year, 
which was negatively impacted by the impairment charges. Basic EPS in Q4 2009 
was EUR 0.22 (Q4 2008: basic loss per share of EUR 0.12). 
 
Currency Impact 
In Q4 2009, currency fluctuations had a negative impact of approximately 2% on 
revenues and on EBITA. 
 
 
 
GEOGRAPHICAL PERFORMANCE 
 
(The pie charts are visible in the PDF version of the report) 
 
Revenues in France declined by 13% to EUR 1.2 billion in Q4 2009. This compares 
to a revenue decline rate of 27% in Q3 2009. EBITA increased by 56% to EUR 36 
million, but on an adjusted basis, EBITA declined by 31% compared to the same 
period last year. The positive release of EUR 14 million due to a reassessment 
of existing accruals, offset  restructuring costs of EUR 12 million. The 
adjusted EBITA margin was 2.7% in Q4 2009, up 20 bps sequentially and compared 
to 3.4% in the same period last year. 
 
InNorth America[5], Adecco's revenues declined by 14% in constant currency to 
EUR 562 million in Q4 2009. EBITA declined by 12% in constant currency, while on 
an adjusted basis, EBITA increased by 3% compared to Q4 2008.  The EBITA margin 
on an adjusted basis increased by 80 bps to 4.8%. The Human Capital Solutions 
business contributed 42% to adjusted EBITA in North America in Q4 2009, compared 
to 63% in Q3 2009. 
 
InGermany & Austria[5], revenues were down 28% to EUR 261 million in the period 
under review. EBITA in Germany & Austria declined by 33% compared to Q4 2008. 
Adjusted EBITA declined by 44% in Q4 09, while the adjusted EBITA margin was 
5.4% (Q4 2008: 6.9%). 
 
InJapan, fourth quarter revenues declined by 29% in constant currency to EUR 
295 million. EBITA declined by 38% in constant currency and the EBITA margin was 
6.3%, a decline of 80 bps compared to Q4 2008. During Q4 2009, the revenue 
decline rate in Japan stabilised. The excellent profitability, despite 
lacklustre demand, is once again a result of the efficient delivery model, 
strict cost management and price discipline. 
 
In theUK & Ireland, revenues in Q4 2009 were flat in constant currency compared 
to Q4 2008, but declined by 21% organically. At the EBITA level the region 
reported a loss of EUR 12 million, mainly due to integration costs related to 
the Spring Group acquisition of EUR 6 million and a sales tax accrual related to 
prior years of EUR 7 million. The integration of Spring Group is well on track. 
 
InItaly, revenues declined by 28% in Q4 2009, and in Benelux by 13% (-19% 
organically). In the Nordics, revenues were down by 25% in constant currency, 
while in Iberia revenues declined by 16%. 
 
Revenues in the Emerging Markets[5] returned back to growth of 5% in constant 
currency and by 7% organically, mainly driven by South America, Eastern Europe 
and India. The corresponding EBITA margin was 3.0% in the period under review. 
 
 
BUSINESS LINE PERFORMANCE 
 
(The pie charts are visible in the PDF version of the report) 
 
In Q4 2009, revenues inOffice and Industrial declined by 20% in constant 
currency to EUR 2.8 billion. In the Industrial business, revenues declined by 
19% in constant currency, following a decline of 33% in Q3 2009. Most notable 
improvements in the year-on-year decline rates were evident in North America, 
from -30% in Q3 2009 to -14% in Q4 2009 in constant currency, in France from 
-29% to -14%, in Italy from -47% to -31% and in Iberia from -36% to   -20%. In 
Q4 2009, revenues in the Office business declined by 22% in constant currency, 
an improvement compared to the third quarter of 2009, where revenues declined by 
28%. In constant currency, revenues in Japan decreased by 28%, equal to the 
decline rate in Q3 2009. The decline rate improved in North America with 
revenues down 11%, after falling 22% in Q3 2009 and in the UK & Ireland the 
revenue decline rate improved from -29% in Q3 2009 to -16% (-18% organically) in 
Q4 2009, all in constant currency. 
 
TheProfessional Business[7] revenues in the fourth quarter of 2009 declined by 
6% in constant currency and by 16% on an organic basis. The gross margin 
declined by 120 bps to 26.3%. 
 
InInformation Technology (IT), Adecco's revenues increased 10% in constant 
currency but declined by 18% organically. Weak developments in North America led 
to a revenue decline in constant currency of 16%, whereas revenues in the UK & 
Ireland increased by 41% in constant currency but declined by 23% on an organic 
basis compared to Q4 2008. 
 
Adecco'sEngineering & Technical (E&T) business was down 18% in constant currency 
and declined by 19% organically. Revenues in North America declined by 12% in 
constant currency, while revenues in Germany & Austria were down by 18% compared 
to Q4 2008. 
 
InFinance & Legal (F&L), revenues declined by 24% in constant currency and were 
down 27% organically.  The main reason for the decline was weak demand in North 
America, where revenues were down 32% in constant currency. 
 
In Q4 2009, revenues inSales, Marketing & Events (SM&E) were down by 14%, 
whereas revenues in Human Capital Solutions (HCS) were up 5% and Medical & 
Science (M&S) declined by 5% (-8% organically), all in constant currency. 
 
 
MANAGEMENT OUTLOOK 
 
The positive development of the revenue trend observed during the fourth quarter 
of 2009, continued into the new year, with the main markets France and North 
America returning back to year-on-year growth in recent weeks. While visibility 
on demand in the coming months remains low, management is gaining confidence on 
the recovery of the industry. Management's focus remains on price discipline and 
strict cost control, while seeking opportunities to take advantage of improved 
market conditions. 
 
In January, Adecco Group revenues were down 5% on an organic basis and adjusted 
for trading days compared to the prior year. Based on current developments, 
management expects a continued improvement of market conditions. 
 
The structural measures taken to improve the cost base in the recent downturn 
coupled with the higher exposure to professional staffing through recent 
acquisitions best position the Adecco Group to take advantage of better economic 
conditions and to further enhance its leading market position in both general 
and professional staffing. As a result, management is committed to improve the 
EBITA margin to above 5.5% mid-term. 
 
 
Successful closing of the acquisition of MPS Group 
On January 19, 2010, Adecco successfully completed the acquisition of MPS Group, 
a leading provider of professional staffing services. This acquisition 
significantly enhances Adecco's position in the professional staffing business, 
particularly in North America and the UK. The integration of MPS Group has been 
initiated immediately after the closing of the deal. Adecco expects the 
transaction to be accretive on an adjusted EPS[8] basis in 2010. The acquisition 
will be EVA[9] positive within three years, in line with Adecco's value based 
strategy and financial discipline. Adecco expects to achieve EUR 25 million of 
annual synergies from the integration of MPS Group within two years. Integration 
costs are expected to amount to approximately one time the annual synergies. 
 
 
 
PROPOSALS TO SHAREHOLDERS 
 
Dividend payout 
At the Annual General Meeting, the Board of Directors will propose a dividend of 
CHF 0.75 per share for2009, for approval by shareholders. This represents a 
payout ratio of 30% based on adjusted net earnings, in-line with Adecco's 
traditional payout range of 25-30%. The dividend payment to shareholders is 
planned on May 25, 2010. 
 
Change to the Board of Directors 
The Board of Directors proposes Mr. Alexander Gut (1963) to be elected as a new 
member of the Board of Directors for a tenure of one year. Alexander Gut is a 
Swiss and UK national. He is the founder and managing partner of Gut Corporate 
Finance AG,an independent Corporate Finance Advisory boutique based in Zurich. 
Previously he held leading positions at KPMG, in his latest role as Member of 
the Executive Committee and Head of Audit Financial Services. Prior to that he 
was a partner at Ernst & Young, where he was in charge of E&Y's global M&A 
network for the financial services industry. He obtained a PhD in business 
administration (Dr. oec. publ.) from the University of Zurich, Switzerland, and 
is a Swiss Certified Accountant (equivalent to ACA/CPA). 
 
 
Q4/FY 2009 Results Conference Calls 
 
There will be a media conference call at 9 am CET as well as an analyst 
conference call at 11 am CET, details of which can be found on our website in 
the Investor Relations section athttp://webcast.adecco.com 
<http://webcast.adecco.com/> 
 
 
 
  UK / Global     + 44 (0)207 107 06 11 
 
  United States   + 1 866 291 41 66 
 
  Cont.Europe     + 41 (0)91 610 56 00 
 
 
Adecco Corporate Investor Relations 
[e-mail] <mailto:[e-mail]> or +41 (0) 
44 878 89 89 
 
Adecco Corporate Press Office 
[e-mail] <mailto:[e-mail]> or [phone] 
 
 
Financial Agenda 2010 
 
    * Q1 2010 results           May 6, 2010 
 
    * Annual General Meeting    May 11, 2010 
 
    * Q2 2010 results           August 11, 2010 
 
    * Q3 2010 results           November 9, 2010 
 
 
Forward-looking statements 
Information in this release may involve guidance, expectations, beliefs, plans, 
intentions or strategies regarding the future. These forward-looking statements 
involve risks and uncertainties. All forward-looking statements included in this 
release are based on information available to Adecco S.A. as of the date of this 
release, and we assume no duty to update any such forward-looking statements. 
The forward-looking statements in this release are not guarantees of future 
performance and actual results could differ materially from our current 
expectations. Numerous factors could cause or contribute to such differences. 
Factors that could affect the Company's forward-looking statements include, 
among other things: global GDP trends and the demand for temporary work; changes 
in regulation of temporary work; intense competition in the markets in which the 
Company operates; integration of acquired companies; changes in the Company's 
ability to attract and retain qualified internal and external personnel or 
clients; the potential impact of disruptionsrelated to IT; any adverse 
developments in existing commercial relationships, disputes or legal and tax 
proceedings. 
 
About the Adecco Group 
The Adecco Group, based in Zurich, Switzerland, is the world's leading provider 
of HR solutions. With over 28,000 FTE employees and more than 5,500 offices, in 
over 60 countries and territories around the world, Adecco Group offers a wide 
variety of services, connecting more than 500,000 colleagues with over 100,000 
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). 
 
 
[1] Organic growth is a non US GAAP measure and excludes the impact of currency, 
acquisitions and divestitures. 
[2] Adjusted is a non US GAAP measure excluding in 2009 the positive impact on 
gross profit of EUR 25 million (Q4 09 EUR 14 million) due to favorable 
developments in France resulting in the reassessment of existing accruals and 
the negative impact of EUR 7 million (Q4 09 EUR 7 million) on gross profit due 
to a sales tax accrual in the UK related to prior years, as well as the negative 
impact on SG&A of EUR 121 million (Q4 09 EUR 30 million) associated with 
restructuring costs. It also excludes in 2008 theimpact of French social 
charges, the provision for the antitrust procedure in France, and the impact of 
restructuring costs.  For further details please refer to page 14. 
[3] EBITA is a non US GAAP measure and refers to operating income before 
amortisation and impairment of goodwill and intangible assets. 
[4]Net debt is a non US GAAP measure and comprises short-term and long-term debt 
less cash and cash equivalents and short-term investments. 
[5]Mexico previously reported under Emerging Markets is since Q4 2009 reported 
together with North America. Austria previously reported together with 
Switzerland is since Q4 2009 reported together with Germany. Puerto Rico 
previously reported under Emerging Markets is since Q1 2009 reported with North 
America. All 2008 information for FY & Q4 has been restated to conform to the 
current year presentation. 
[7] Professional business refers to Adecco's Information Technology, Engineering 
& Technical, Finance & Legal, Medical & Science, Sales, Marketing & Events and 
Human Capital Solutions business. 
[8] Excluding amortisation and integration costs 
[9] Based on Adecco's cost of capital 
 
 
The full report (in English) including tables can be downloaded from the 
following link: 
 
 
 
[HUG#1390371] 
 
 
 
 
 
    Press release (English) PDF: http://hugin.info/136572/R/1390371/348389.pdf