Adecco SA Reports 38% Operating Income Growth in the First Quarter of 2001.Business Editors CHESEREX, Switzerland--(BUSINESS WIRE)--April 25, 2001 Highlights: - Revenue growth of 31% in CHF, 35% in local currency - Operating income growth of 38% in CHF, 42% in local currency - Income before amortization growth of 30% - Operating margin improvement of 20 basis points from 3.9% to 4.1% - Double-digit growth in France, Belgium, Spain, Italy and Japan - Focus on profit and operating margin improvement in a lower growth environment - North America's profits up considerably despite slowing market conditions - Gains in market share amid bearish economic conditions - Strong results in outplacement and career management sector Adecco SA, the global leader in personnel services, today reported its results for the first quarter ended April 1, 2001. Group revenues increased by 31% to CHF CHF In currencies, this is the abbreviation for the Swiss Franc. 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. 6.7 billion in the first quarter of 2001. In local currency, revenues increased by 35%. 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. grew faster than revenues at the rate of 38% to CHF 276 million, illustrating the company's strategy geared towards the improvement of profits and margins in an environment characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by lower growth. In local currency, operating income grew 42%. Income before amortization of goodwill increased by 30% to CHF 161 million. Exceptional one-time charges of CHF 15 million for write-downs of Internet company participations and CHF 8 million for the cumulative effect of accounting changes were recorded in the first quarter of 2001. In local currency, revenues grew organically approximately 8% as management had anticipated in the beginning of the year. Focus on profitability improvement led to approximately 29% organic growth in operating income. While currency fluctuations contributed positively last year, they had a negative impact of approximately 4% on the consolidated results in the first quarter of 2001. "Our performance in the first quarter was again very pleasing" comments John Bowmer, Adecco's 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. . "We were able to increase our market share in a slower growing world market while at the same time increasing operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by 20 basis points by proactive cost management and improved product mix. We are confident that this improvement in our competitive position will pay off when markets rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective ." Performance Drivers, Regional and Business Line Performance 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. posted strong revenue growth of 42% in CHF and 40% in local currency in the first quarter of 2001 compared to last year's first quarter. North America's organic revenue growth was negatively impacted by the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of market conditions in the USA, but the region posted a substantial increase in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , both total and organic, due to achieved cost synergies Cost Synergy In the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. Notes: The savings in operating costs usually come in the form of laying off employees. and product mix enhancements. Revenues in Europe grew 27% in CHF and 34% in local currency. In France and UK growth in CHF was in the low twenties, and nearly 30% in local currency. Europe posted strong profits both in CHF and local currency. The Rest of world recorded triple-digit revenue growth, both in local currency and CHF, with sharp increase in profits. Revenue performance drivers were France, Belgium, Spain, Italy and Japan. Major contributors to the profit growth were USA, Germany, Switzerland, UK, Spain and Italy. Specialty brands posted combined revenue growth of 21% in CHF and 23% at constant rate, and operating income increase of 31% in CHF and in local currency. "We are now seeing synergies from the Olsten merger, as US profits are up considerably despite slowing market conditions", highlighted John Bowmer. "Increased profitability was also seen in Europe, led primarily by outstanding performances in Italy, Spain, Germany, and Switzerland. I am equally delighted with the performance at Lee Hecht Harrison, our 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. and Career Management brand, where first quarter profits are up over 60% against the same period in 2000." Internet Update The company's e-commerce initiatives continue to progress and started to bear results. After only a few months in operation, the Italian portal www.Adecco.it assembled a database of over 300,000 registered and certified See certification. candidates, more than any other Internet site in Italy. Recent estimates show that approximately 8% to 9% of revenues in Italy are generated from online activities. This web-based system has also been rolled out in Spain. The French web portal See portal. is on schedule to go live in September this year. "We are very pleased with the success of our own Internet developments", says Felix Weber, Adecco's CFO See Chief Financial Officer. . "E-commerce is an important component of our strategy. The Internet is a key to a fast and cost effective expansion. It allows us to serve our Clients better, to approach candidates more effectively and to accelerate the business expansion. On top of this, the Internet gives us the opportunity to build new businesses, capitalizing on our strong market positions in the world." Outlook Commenting on near-term expectations, John Bowmer said, "We have entered a period of slower market growth. Conditions have deteriorated since last year, but Adecco is well positioned to thrive in such an environment. Our market leadership, cost efficiencies, technology, balanced portfolio and above all outstanding people will ensure a solid platform for sustainable growth." US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Results For the three months ended April 1, 2001 Adecco reported under US Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) revenues of CHF 6.7 billion and a net loss of CHF 182 million after charging goodwill amortization of CHF 320 million, and one-time charges of CHF 15 million for Internet investment write-down and CHF 8 million, net of tax for the cumulative effect of accounting change in resulting from adoption of the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement No. 133, as amended, "Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging Activity". According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Chief Financial Officer, Felix Weber, "This net result reflects the accounting principles of US GAAP and Adecco's chosen goodwill amortization schedule of five years. Adecco considers operating income and income before amortization of goodwill and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. to be the most relevant benchmarks of the company's financial performance, as they measure our operational performance and our ability to fund growth and to distribute dividends." Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to risks and uncertainties. The Company's actual results may differ materially from the results anticipated in these 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. as a result of certain factors as set forth in the Company's reports on Form 20-F made pursuant to the Securities Exchange Act of 1934. For instance, the Company's results of operations may differ materially from those anticipated in the forward-looking statements due to, among other things: management's ability to effectively integrate Olsten Corporation into the Company's existing operations; the Company's ability to continue to mitigate the effects of legislation in France upon gross margins; increased price competition, the general level of economic health and activity in the markets and countries in which the Company operates; the impact of changes in foreign currency exchange rates; changes in interest rates; and the continued availability of qualified personnel. In addition, the market price of the Company's stock may be volatile from time to time as a result of, among other things: the Company's operating results, the operating results of other staffing service providers, and changes in the performance of global stock markets in general. About Adecco Adecco SA is the global leader in personnel services. With the addition of Olsten, the Adecco network connects up to 700,000 associates with business clients each day through its network of over 30,000 employees and over 5,000 offices in 58 countries around the world. Registered in Switzerland, and managed by a multinational team with expertise in markets spanning the globe, Adecco delivers an unparalleled range of flexible staffing and career resources to corporate clients and qualified associates. Adecco provides clients with staffing services and solutions covering all major industries as well as specific professions. The worldwide Adecco Brand network focuses on global industries in transition, including automotive, banking, electronics, logistics, and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. . Adecco is also positioned as a worldwide leader in each of the major professional staffing segments with several world-class business lines: aoc (Accountants on Call) and Jonathan Wren wren, small, plump perching songbird of the family Troglodytidae. There are about 60 wren species, and all except one are restricted to the New World. The plumage is usually brown or reddish above and white, gray, or buff, often streaked, below. for Finance, Banking and Accounting; Ajilon and Computer People for high-end Information Technology, TAD and Roevin for Engineering and Technical. These Adecco businesses provide their clients with a broad range of staffing solutions, from temporary work to permanent placement, to consulting and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality . Adecco also offers a range of HR solutions with Econova/Lee Hecht Harrison, delivering outplacement and career management services. Adecco clients retain this unique range of services through local, national and multinational contracts. Adecco SA is listed on The Swiss Exchange Swiss Exchange The major securities market of Switzerland. (ADECCO N (ADEN 700'939)), NYSE NYSE See: New York Stock Exchange (ADO), Euronext Premier Marche (12819). Further information can be found at the Investors page at www.adecco.com
Financial Highlights (Unaudited)
CHF millions Three Months Ended % Change
April 1, 2001 April 2, 2000
Net service revenues 6,728 5,150 31%
Operating Income 276 200 38%
Income before amortization
of goodwill 161 124 30%
One-time items (1) (23)
Amorization of goodwill (320) (192) 67%
Net income (loss) (182) (68)
Income per share before
amortization of
goodwill-Basic 8.68 6.96 25%
Income per share before
amortization of
goodwill- Fully diluted 8.46 6.74 26%
Net Service Revenues by Geographic Segment (Unaudited)
CHF Millions Three Months Ended % Change
( in Swiss Francs)
1 April, 2001 April 2, 2000
Europe 4,004 3,158 27%
North America 1,975 1,386 42%
Asia Pacific 560 514 9%
Rest of the World 189 92 105%
Total Adecco 6,728 5,150 31%
Specialty Brands 904 746 21%
Income before amortization of goodwill and restructuring charges
is not meant to portray net income or cash flow in accordance with
U.S. generally accepted accounting principles. Goodwill amortization
is a non-cash charge to operating income; however, income before
amortization of goodwill does not represent cash available to
shareholders. This may not be comparable to similarly entitled items
reported by other companies. Adecco amortizes goodwill over its
estimated life of five years.
Additional information available upon request. |
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