Adecco invests in IT as revenues dip in ‘challenging market’

Human resources company Adecco SA (SWX: ADEN) told investors that they had expanded their IT and digital investment, but saw their revenues dip during the third quarter.

The Company stated that revenues were down 2% year-on-year and down 4% organically, in what was described as challenging market conditions in Europe and the US. The Group’s revenues in September and October combined were down 4%.

Adecco added that its EBITA margin was down 10 basis points on-year, to 4.9%. The Group’s structural productivity progress were offset by its revenue drop and IT investments.

However, the Company reported improvement in their gross margin, up 70 basis points to 19.4%, pushed up by “value-based pricing and enhanced business mix”. It added that its GrowTogether transformation programme is on track to deliver on its 2019 and 2020 commitments.

Similarly, Mitsubishi Electric Corporation (LON: MEL) also posted an underwhelming update, while Euromoney Institutional Investor PLC (LON: ERM) and Filta Group Holdings PLC (LON: FLTA) both relished their successes.

Adecco comments

Alain Dehaze, Group Chief Executive Officer, said,

“In Q3 2019, we delivered a solid performance in an uncertain external environment. We remain focused on our business transformation and continue to invest in our strategic priorities – GrowTogether, IT and our digital ventures – which are fundamentally strengthening our business.

Our ongoing emphasis on value-based pricing and business mix improvement is driving a sustained increase in gross margin, which was up 60 basis points organically year-on-year.

We also delivered strong performances in the Career Transition and Talent Development activities, with a return to growth in Lee Hecht Harrison and revenue acceleration in General Assembly, confirming the value that these businesses bring to our portfolio.

As we look to the fourth quarter, we are continuing to build the next layer of the GrowTogether programme, with a focus on digital tools and solutions that deliver greater value to our clients and candidates. This includes rolling out an enhanced integrated front office solution, our global candidate app and the PERFORM methodology, putting us on track to deliver the EUR 250 million GrowTogether productivity target for 2020.”

Investor notes

The Company’s shares have dipped 1.22% or 0.72p to 58.48p per share 05/11/19 12:44 CET. The Group’s market cap is 9.66 billion CHF, their dividend yield stands at 4.22%.

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Jamie Gordon
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.