Global downturn hammers Adecco profits

Adecco says it is well placed to fly headlong into any economic recovery Keystone

Adecco, the Swiss-based global employment firm, saw its 2002 core profit fall by 48 per cent to SFr362 million ($268.9 million).

The worse-than-expected result saw Swiss-listed shares in the world’s largest employment firm decline by up to nine per cent during early morning trade on Wednesday.

Net income at Adecco rose sharply to SFr354 million after the company plunged into the red in 2001 chalking up losses of SFr427 million.

Analysts say the improved net profit was mainly because the firm has stopped amortising one-off costs.

Much of Wednesday’s share price decline has been attributed to Adecco’s failure to put most of its bad figures into the 2002 result. Investors expect these costs to be filed in 2003.

Switching to Euros

Felix Weber, Adecco’s chief financial officer, said the firm would no longer report its financial returns in francs, switching to Euros from this year.

Part of the reason for the switch is the franc’s high value. Sales by Adecco in 2002 were SFr25.1 billion francs – a fall of eight per cent on the previous year when expressed in francs.

By contrast, sales fell only three per cent in local currencies.

“By reporting in Euros, we expect to eliminate a substantial amount of currency-related volatility from our reported results,” Weber said.

“We generate approximately 50 per cent of our revenue and have a similar share of costs in Euros, which makes it sensible in future to report in this currency.”

Well placed

Adecco’s operating income declined 44 per cent to SFr662 million, reflecting a global slump in demand for workers.

While the result has disappointed most analysts, some believe Adecco is better placed than its rivals to benefit from an economic recovery.

Last year, the company expanded its branches, while most of its competitors embarked on cost cutting exercises.

Financial analyst, Nicole Burthschudi, told swissinfo that keeping all its branches open during hard times must have been very costly for Adecco.

But the decision meant, she said, that the company would be “ready for the pick-up” in the economy, if and when it comes.

She explained that Adecco was a business based on volume.

“If you have an economy like ours with little growth, then volumes are lower,” said Burthschudi.

Jérôme Caille, Adecco CEO, said the firm’s more than 5,800 branches gave it the largest network in the industry.

“[This] ideally positions us to maximise opportunities in all geographies and fully benefit from the upturn,” Caille said.

“Adecco is well positioned to benefit in 2003 from the reorganisation work done in 2002”.


swissinfo with agencies

Key facts

Adecco is the world’s largest employment firm with 5,800 branches worldwide.
In 2002 its operating profit was SFr662 million (down 43.9 per cent on 2001).
Last year’s net profit was SFr354 million (up 182.9 per cent on 2001).
Net profit was boosted because the firm chose not to write down certain costs in 2002.