Adecco Announces Q1 2004 Results and Proposals For AGM; Accelerating Sales Growth Demonstrates Resilience of Business.Business Editors CHESEREX, Switzerland--(BUSINESS WIRE)--June 4, 2004 Adecco S Adecco S.A. is the largest human resources company in the world, based in Glattbrugg, Switzerland. The company was formed in 1996 as a result of the merger of the French company Ecco and the Swiss Adia Interim, and currently has over 6600 offices in over 75 countries worldwide. .A.(NYSE NYSE See: New York Stock Exchange :ADO): Highlights Q1 2004 results -- Group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. up 4.4% in local currency to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 3.8 billion (down 1% in Euro) -- Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. down 8% in local currency excluding corporate costs -- Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of EUR 87 million, compared to EUR 88 million in Q1 2003 -- Net debt, including off-balance sheet debt, reduced by a further EUR 81 million to EUR 837 million -- Additional audit fees and fees for other advisers of EUR 36 million Key Proposals for the Annual General Meeting ("AGM AGM annual general meeting AGM n abbr (= annual general meeting) → AG f AGM n abbr (= annual general meeting) → JHV f ") -- Candidates for election to the Board are Jakob Baer1, Jurgen Dormann, Philippe Foriel-Destezet Philippe Foriel-Destezet (born 1936) is one of the world's richest people, according to a 2004 listing by Forbes. He owns 18% of the Swiss employment agency Adecco as well as a significant interest in AKILA Finance. , Klaus J. Jacobs, Philippe Marcel Marcel the fast ebbing of time impels him to devote his life to recording it. [Fr. Lit.: Proust Remembrance of Things Past] See : Time , Francis Mer Francis Mer (may 25th, 1939, in Pau) is a French businessman, industrialist and politician. A former alumnus of the Ecole polytechnique, he was hired in 1970 by the Saint-Gobain group. In 1982, he became chairman of the board of Pont-à-Mousson SA. , Thomas O'Neill Thomas O'Neill can refer to:
Ueberroth -- Elimination of the 5% voting limit to be proposed Today Adecco announces the Company's unaudited financial results for the first quarter of 2004. In addition, the Board of Directors has outlined a number of proposals which will be put forward to the AGM, scheduled for June 29, 2004. Jerome Caille, Adecco Group Chief Executive Officer, commenting on the Q1 2004 results, said: "We are pleased with our sales performance, which was up 4.4% in local currency in the first quarter, our fastest growing quarter since Q2 2001. Moreover, we have not lost any major clients due to the recent events - in fact, we actually succeeded in growing our client base further in the quarter. I am tremendously proud of these results, which demonstrate the resilience resilience (r  ·zilˑ·yens),n of our business in what has been a very challenging period for the Company. Gross margins came under pressure in the quarter, mainly due to pricing pressure and changes in business mix. In addition, our profitability was significantly impacted by the non-recurring costs related to the audit delay, of which EUR 36 million was incurred in the first quarter. However, we anticipate that sales and profitability will improve after this challenging first quarter resulting in further increases from higher margin permanent placements, temporary staffing pay rate increases and a decline in workers compensation in the US. I am confident that we are now well positioned to continue to grow our leadership in the world of work." Commenting on the proposals for the AGM, John Bowmer, Executive Chairman of the Board, said: "I am delighted to announce that we have assembled a very talented new Board who will be able to greatly contribute to the future success of Adecco." First quarter 2004 results Sales Group sales for the first quarter were up 4.4% over Q1 2003 in local currency at EUR 3.8 billion. Sales were down 1% in Euro due to the impact of exchange rate movements. In the Adecco Staffing Division, sales growth was 5% in local currency and 1% in Euro. Sales in local currency in Europe were up 5% with growth in France, Spain, Italy, the UK and Belgium offset by declines in the Netherlands and Germany, whilst in Switzerland sales were flat. In North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , sales in local currency were up 3%, reflecting 3% growth in the US. In Asia/Pacific sales in local currency were up 10%, largely boosted by a 10% increase in Japan. In the Ajilon Professional Division, sales growth was 2% in local currency (down 5% in Euro). This is the first quarter of underlying growth in the business, showing the effect of the economic recovery. In the LHH/Career Services Division, sales were down 22% in local currency (down 32% in Euro), reflecting the further decline in demand for outplacement out·place·ment n. The process of facilitating a terminated employee's search for a new job by provision of professional services, such as counseling, paid for by the former employer. services during the initial period of the economic recovery. Gross margin In the first quarter, the Group's gross margin was 16.6%, down 109 basis points compared to 17.7% in the first quarter of 2003 and down 26 basis points compared to 16.9% in the fourth quarter of 2003. The decrease in gross margin was largely due to pricing pressure and changes in business mix. This change in business mix was driven by two major elements, the rapid decrease of LHH LHH League for the Hard of Hearing LHH Laguna Honda Hospital (San Francisco, California) LHH L-Band HH LHH Lutheran Hospice of Hope given the outplacement cycle and the faster growth of large accounts in the economic recovery compared to higher margin transactional business from smaller companies. Operating costs operating costs npl → gastos mpl operacionales Operating costs increased by 8% in local currency compared to Q1 2003 and by 1% in Euro. This increase was primarily due to the charging of EUR 36 million for additional audit fees and fees for other advisers. Excluding these costs, the operating costs increased by 1% in local currency. The ratio of operating costs to sales this quarter increased to 15.1% of sales (excluding the additional audit fees and fees for other advisers to 14.1% of sales) compared with 14.8% in Q1 2003. Operating income Operating income before amortisation and additional audit fees and fees for other advisers was EUR 96 million compared to EUR 113 million of operating income before amortisation in the first quarter of 2003. Operating income before amortisation was EUR 60 million this quarter, down 45% in local currency (down 47% in Euro), representing a return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. of 1.6%. Excluding EUR 36 million charged for additional audit fees and fees for other advisers, return on sales decreased by 49 basis points in local currency terms to 2.5% in Q1 2004 from 3.0% in Q1 2003. Operating income excluding amortisation and corporate expenses in local currency decreased 8% to EUR 119 million compared to Q1 2003. Operating income was EUR 59 million, down 47% in Euro compared to EUR 112 million in Q1 2003, representing an overall return on sales of 1.6%. Interest and other expenses Interest expense decreased to EUR 15 million compared to EUR 21 million in the first quarter of 2003. Net foreign exchange losses were EUR 3 million compared to EUR 1 million in the first quarter of 2003. Interest income was EUR 3 million in the first quarter of 2004 compared to EUR 2 million in Q1 2003. Non-operating income was EUR 2 million compared to non-operating expenses of EUR 4 million in the first quarter of 2003. Provision for income taxes The provision for income taxes decreased to EUR 16 million this quarter from EUR 24 million in the first quarter last year. The effective tax rate increased to 35% from 27% in Q1 2003. This increase is primarily due to additional audit fees and other advisers' fees being incurred in lower tax jurisdictions, certain other income streams being taxed at higher tax rates and not benefiting from favourable tax dispute settlements as enjoyed in 2003. Net income Net income decreased in the first quarter by 53% to EUR 30 million. Net debt and cash flow Net debt, defined as short-term and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. and off-balance sheet debt less cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , was EUR 837 million at the end of Q1 2004. This represents a reduction of EUR 81 million during the first quarter, even after incurring additional audit fees and fees for other advisers, and a reduction of EUR 453 million from the level at the end of Q1 2003. Strong operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of EUR 87 million was a major contributor to this reduction. Divisional performance in the first quarter 2004 Adecco Staffing Adecco Staffing is the number 1 in the world, and is ranked number 1 in 9 of the 13 most important staffing markets. In the first quarter Adecco Staffing increased sales by 5% and increased gross margin by 1% in local currency. Contribution decreased by 5% in local currency. -- Adecco France achieved sales growth of 4% and continued to grow market share in the quarter. Contribution decreased by 25%, largely due to pricing pressure and this quarter's comparison with an exceptionally strong first quarter last year. -- Adecco North America sales were up 3% in local currency and improved contribution - a particularly good result given the additional work created by the audit. -- Adecco UK sales were up 7% in local currency, the second year of constant growth. Contribution was up 49% in local currency compared to last year, largely due to a series of low cost branch openings and a highly targeted approach to the market. -- Adecco Japan posted sales growth of 10% in local currency. However, contribution in local currency was down 60% largely due to our investment in building our presence in this market following recent regulatory reforms Regulatory Reform concerns improvements to the quality of government regulation. At the international level, the "OECD Regulatory Reform Programme is aimed at helping governments improve regulatory quality -- that is, reforming regulations that raise unnecessary obstacles to . -- Adecco Italy sales were up 12% in local currency, a further improvement over the previous quarter, and contribution increased 25% in local currency. -- Adecco Spain sales grew by 8% and contribution improved by 38%, largely as a result of gross margin improvements and its efficient cost structure. -- Adecco Switzerland sales were flat with contribution down 26% in local currency largely due to the decrease in the high margin permanent placement business. -- Germany sales were down by 2% compared to last year. Contribution improved significantly from last year's level. -- Adecco Benelux sales were flat overall with a decline in the Netherlands of 7% offset by a 7% sales growth in Belgium. Ajilon Professional Sales for the first quarter in local currency continued to improve to EUR 412 million, an increase of 2% compared to Q1 2003 in local currency. Profits were up 11% in local currency to EUR 15 million (up 3% in Euro). In the US sales in local currency were down just 1% at Ajilon Consulting and down 5% at Ajilon Finance. In the UK sales in local currency were up 7% at Ajilon Consulting, up 1% at Ajilon Engineering and up 17% at UK Ajilon Finance while sales at Ajilon Office Angels were down 1%. LHH/Career Services At LHH which represents 1% of Group revenues and 9% of profits, sales for the quarter of EUR 43 million were down 22% in local currency (32% in Euro). Profits declined by 39% to EUR 11 million (down 48% in Euro) in line with the decrease in sales as the division adjusted its cost base to adapt to current business levels. Corporate Expenses Corporate expenses increased by EUR 39 million to EUR 59 million in the first quarter of 2004. This increase is primarily driven by EUR 36 million of additional audit fees and fees for other advisers. In addition, employee stock options of EUR 5 million were expensed for the first time in this quarter. Proposals for the Annual General Meeting Changes to the Board The Board has decided to propose the following candidates at its Annual General Meeting: Jakob Baer, currently CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm) KPMG Kaiser Permanente Medical Group KPMG Keiner Prüft Mehr Genau (German) KPMG Kommen Prüfen Meckern Gehen Switzerland (will join the Board as of October 1, 2004); Jurgen Dormann, CEO and Chairman of the Board of ABB n. 1. Among weavers, yarn for the warp. Hence, Noun 1. ABB - an urban hit squad and guerrilla group of the Communist Party in the Philippines; formed in the 1980s ; Philippe Foriel-Destezet, Member of the Board, Adecco SA, Klaus J. Jacobs, Philippe Marcel, Member of the Board, Adecco SA, Francis Mer, former Finance Minister of France; Thomas O'Neill, Member of the Board and Chairman of the Audit & Finance Committee of Bell Canada Bell Canada Enterprises (TSX: BCE, NYSE: BCE), legally BCE Inc., is a major Canadian telecommunications company. Through its subsidiaries including Bell Canada, Bell Aliant, Northwestel, Télébec, and NorthernTel, it is the incumbent local exchange carrier for Enterprises, David Prince, former Group Finance Director of Cable & Wireless, Member of the Board and Chairman of the Audit and Finance Committee of Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. Group; Peter Ueberroth Peter Victor Ueberroth (born September 2, 1937 in Evanston, Illinois) is an American executive. He served as the 6th commissioner of Major League Baseball from 1984 to 1989, and is currently head of the United States Olympic Committee. , Entrepreneur, Member of the Board of The Coca Cola Noun 1. Coca Cola - Coca Cola is a trademarked cola Coke cola, dope - carbonated drink flavored with extract from kola nuts (`dope' is a southernism in the United States) Company. Elimination of 5% voting limit At present, a shareholder holding more than 5% is registered as "shareholder without voting right Voting Right The right of a stockholder to vote on matters of corporate policy as well as on who is to compose the board of directors. Notes: Most voting involves decisions on issuing securities, initiating stock splits, and making substantial changes in the corporation's " for the shares exceeding such 5%. The Board of Directors proposes to abolish this restriction, following the principle "one share one vote". Outlook Worldwide demand for temporary staffing is accelerating and Adecco expects it to further strengthen over the course of 2004. In the short term, Adecco expects some margin pressure resulting from competitive pricing as well as a change in business mix with a decrease in demand for outplacement services. Furthermore, profitability will continue to be impacted by the significant non-recurring costs related to the delay in finalising the 2003 audited results. However, Adecco remains confident about the medium term profitability outlook and expects gross margins to be positively impacted by the increase in the number of permanent placements, the recovery of the professional staffing sector, particularly in Information Technology, and the accelerated growth in deregulated countries with higher margins. Furthermore, the Company's lower cost base and higher productivity will result in a high conversion of top line sales growth into bottom line profitability. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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. (the "Company") as of the date of this release, and we assume no duty to update any such forward-looking statements. Factors that could affect the Company's forward-looking statements include, among other things: the outcome of investigations by governmental agencies or stock exchanges; the pace of economic recovery in various regions and the demand for temporary staffing; the impact and result of any litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. (including US class action litigation); any adverse developments in existing commercial relationships, disputes or legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. ; volatility of the Company's stock price; intense competition in the markets in which the Company competes; and negative reactions from the Company's shareholders, creditors or vendors with respect to any of the foregoing matters. The 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. Please refer to the Company's Annual Report on Form 20-F for the year ended December 29, 2002, and other reports filed with or submitted to the US Securities and Exchange Commission from time to time, for a further discussion of the factors and risks associated with our business. About Adecco Adecco S.A. is a Forbes 500 company and the global leader in HR Solutions. The Adecco Group network connects 650,000 associates with business clients each day through its network of 28,000 employees and more than 5,800 offices in 70 territories around the world. Registered in Switzerland, and managed by a multinational team with expertise in markets spanning the globe, the Adecco Group delivers an unparalleled range of flexible staffing and career resources to corporate clients and qualified associates. The Adecco Group, after the sale of jobpilot (e-HR Services) in 2004, comprises three Divisions, Adecco Staffing, Ajilon Professional and LHH Career Services. In Adecco Staffing, the Adecco staffing network focuses on flexible staffing solutions for global industries in transition, including automotive, banking, electronics, logistics and telecommunications; Ajilon Professional offers an unrivalled range of specialised Adj. 1. specialised - developed or designed for a special activity or function; "a specialized tool" specialized specific - (sometimes followed by `to') applying to or characterized by or distinguishing something particular or special or unique; "rules with consulting and project management businesses and LHH Career Services encompasses our portfolio of outplacement and coaching. Adecco S.A. is registered in Switzerland (ISIN Isin (ĭs`ĭn), capital of an ancient Semitic kingdom of N Babylonia. The city became important after the third dynasty of Ur fell to the Elamites and the Amorites (c.2025 B.C.). The phase from c.2025–c.1763 B.C. : CH0012138605) and listed on the Swiss Stock Exchange with trading on Virt-x (SWX/VIRT-X:ADEN), the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (NYSE:ADO) and Euronext Paris Euronext Paris is France's securities market, formerly known as the Paris Bourse, which merged with the Amsterdam and Brussels exchanges in September 2000 to form Euronext NV, which is the second largest exchange in Europe behind the London Stock Exchange. - Premier Marche (EURONEXT: ADE). Additional information is available at the Company's website at www.adecco.com. (1) As of October 1, 2004.
Selected Financial Highlights
EUR millions Three months ended % change
------------------------------------------
March 28, March 30,
2004 2003 EUR Constant
------------------------------------------
Net service revenues 3,807 3,832 -1% 4%
Operating income before
amortisation(1) 60 113 -47% -45%
Amortisation of intangibles (1) (1)
Operating income 59 112 -47%
Net income 30 64 -53%
---------------------------
Net income per share
Basic 0.16 0.34
Diluted 0.16 0.34
Weighted average shares 186,985,582 186,697,246
Diluted shares 187,621,398 192,069,919
(1) Operating income before amortisation is a non-US GAAP (US
generally accepted accounting principles) information used by
management as supplementary information.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion