Adecco Group Reports €5.7 Billion in Revenue

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Adecco Group Reports €5.7 Billion in Revenue

Adecco Group AG (ADEN.SW) reported revenues of €5.7 billion for the third quarter of 2024. This represents a 5% decline year-over-year on an organic workday adjusted basis and a 3% decline on an organic basis. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) reached €186 million, with a margin of 3.3%. The adjusted earnings per share (EPS) decreased by 3% year-over-year on a constant currency basis to €0.68. Despite the decline, Adecco anticipates that fourth-quarter revenues, gross margin, and selling, general and administrative (SG&A) expenses will be consistent with the third quarter. The company is focusing on general and administrative (G&A) cost savings and market share growth, supported by initiatives such as a GenAI-backed business model.

Key Highlights

  • Adecco Group AG's revenue for Q3 2024 showed a 5% decline on an organic workday adjusted basis.
  • Gross margin was 19.4%, impacted by lower volumes and a challenging year-over-year comparison.
  • EBITDA reached €186 million, with a margin of 3.3%; adjusted EPS was €0.68, down 3%.
  • Regional performance was mixed; declines were seen in France and Northern Europe, growth occurred in Southern Europe and EEMENA, with a decline in the Americas.
  • Year-to-date cash flow from operating activities amounted to €216 million, with a net debt/EBITDA ratio of 3.1x.
  • The company plans to repay €430 million in debt by December 2024 and aims to keep year-end net debt close to the previous year’s level of €2.59 billion.
  • Adecco is focusing on G&A savings, market share growth, and digital transformation through partnerships and innovation.

Company Outlook

  • Fourth-quarter revenues, gross margin, and SG&A expenses are expected to reflect the results of Q3.
  • G&A savings are projected to reach an operating rate of €171 million by year-end.
  • Since the launch of the "Simplify, Apply, and Grow" agenda, market share has increased by 850 basis points relative to competitors.
  • The company aims for future growth despite industry-specific challenges in the DACH region and France.

Negative Highlights

  • Revenue declines were experienced in key regions, with significant decreases in France and Northern Europe.
  • Operating cash flow dropped from €282 million in the previous year to €121 million in Q3.
  • A revenue loss of 100 basis points is expected due to regulatory changes in France.

Positive Highlights

  • Southern Europe and EEMENA regions recorded a 2% revenue growth.
  • Free cash flow increased to €82 million in Q3, indicating a positive outlook for future improvements.
  • The company’s creditworthiness was reflected in a successful refinancing of €300 million with a 3.4% coupon.

Misses

  • Adjusted EPS decreased by 3% year-over-year on a constant currency basis.
  • Year-to-date cash flow from operating activities was €30 million lower compared to the previous year.

Q&A Highlights

  • CEO Denis Machuel assured that significant market share has been gained despite challenges.
  • CFO Coram Williams emphasized the stability of net debt and the potential for increased free cash flow.
  • Management addressed concerns regarding the impact of regulatory changes and pressure on gross margins.
  • The company remains optimistic about its career transition revenue performance and the U.S. small business sector.

As Adecco Group AG navigates a challenging economic environment, it continues to maintain a strategic focus on cost management and market share growth. With a stable outlook for the fourth quarter and ongoing digital transformation efforts, the company positions itself for recovery and sustainable performance in the future.