Adecco sees rising demand for temporary staff in Europe
By Caroline Copley
ZURICH (Reuters) - A nascent economic recovery in Europe helped Adecco , the world's largest staffing agency by sales, beat fourth-quarter profit forecasts and increase revenue for the first time in seven quarters.
Staffing companies benefit from moderate economic growth as firms tend to hire temporary workers at the start of a recovery when they are reluctant to commit to full-time hiring.
Chief Executive Patrick De Maeseneire said double-digit growth in the manufacturing sector, especially in Germany and Spain and now in Italy and France, made the company optimistic that its growth rate would gradually improve during the year.
"We continue to be positive for the rest of the year and possibly also into next year, because there is no reason why this pick-up should suddenly stop," De Maeseneire said.
Shares in Adecco were trading up 4.3 percent at 78.55 francs by 1048 GMT, making them the biggest gainers on the pan-European FTSEurofirst 300 index <.FTEU3>.
Adecco's upbeat outlook contrasted with Dutch rival Randstad , which last month said it expected only a gradual improvement because of a patchy economic recovery.
Manpower in the United States, where economic recovery is more advanced, also gave a guarded forecast for first-quarter revenue growth.
Adjusted for trading days and currency fluctuations, Adecco's revenue rose 5 percent in January and February, and the company said it expected to achieve high single-digit growth this year.
Vontobel analyst Michael Foeth, who has a "buy" rating on the stock, said the acceleration in growth together with Adecco's disciplined cost management will boost operating profit.
A TALE OF DIFFERENT SECTORS
Recent indicators have painted a rosier outlook for Europe's economy, which emerged from recession last year.
The European Commission has raised its growth outlook for the euro zone, while manufacturing activity hit a 2-1/2 year high in January, although a slight easing last month underscored the fragility of the recovery.
Adecco said its industrial business continued to drive demand in the first two months of the year, with growth coming from the machine-building industry and manufacturers of goods for heavy industry.
At the same time, some clients continued to shed staff helping revenue in Adecco's outplacement business rise 12 percent in the fourth quarter.
Demand for its outplacement service, which companies use to help people they have made redundant find new jobs, was mainly coming from financial services, the pharmaceutical sector and legacy technology companies, Chief Financial Officer Dominik de Daniel added.
The Zurich-based firm, which makes about 60 percent of its revenue in Europe, reported double-digit percentage revenue growth in Germany, Benelux and Iberia.
Revenue in its biggest market, France, was flat after many quarters of declines. It expects the market to return to growth in the first half of the year.
Excluding currency swings, fourth-quarter revenue rose 4 percent to 4.94 billion euros ($6.85 billion), the first time it had grown since the first quarter of 2012.
Net profit rose to 174 million euros, well ahead of the 126 million forecast by analysts in a poll.
Adecco proposed a dividend of 2.00 Swiss francs per share compared with 1.80 francs a year ago.
(Reporting by Caroline Copley; Editing by Erica Billingham)
