4 Q 2001 Adecco delivers outstanding 2001 results in a very challenging market
Revenue growth of 2% to CHF 27.2 billion in 2001, 5% growth in local currency.
Chéserex, Suisse, Feb 6, 2002
- Fourth quarter revenue contraction of 12% in CHF, 7% contraction in local currency
- Operating income decline of 5% to CHF 1.2 billion in 2001, 2% decline in local currency
- Fourth quarter operating income decline of 36% in CHF, 32% decline in local currency
- Income before amortisation of goodwill, restructuring costs and one-time items contraction of 6% to CHF 702 million in 2001, 2% decline in local currency
- Substantial generation of operating cash-flow of CHF 1.4 billion in 2001
- Improved debt structure with repayment of debt
- Board of Directors propose dividend of CHF 1 per share
CHESEREX, SWITZERLAND, February 6, 2002 - Adecco SA, the worldwide leader in personnel services, announced today its financial results for the fiscal year 2001. Group revenues increased by 2% to CHF 27.2 billion, while operating income declined by 5% to CHF 1.2 billion. In local currency, revenues grew 5% and operating income declined by 2%, indicating a 3% negative currency impact on Adecco's consolidated results. The company reported income before amortisation of goodwill, restructuring costs and one-time items of CHF 702 million, down 6% on last year's figures (2% decline in local currency). The substantial operating cashflow generation of CHF 1.4 billion was in great extent used to repay debt and to invest in infrastructure.
In the fourth quarter, Group revenues contracted by 12% (7% contraction in local currency), while operating income was down 36% (down 32% in local currency), reflecting further volume decline in key markets. Income before amortisation of goodwill, restructuring costs and one-time items was down 37% (34 % in local currency). The Group generated operating cash-flow of CHF 715 million in the fourth quarter.
"We are very pleased that the Group closed this challenging year with some top line growth and only a small decline in profit. As expected, volumes dropped substantially in the fourth quarter, as economies softened world-wide. Our operating margin fell by 30 basis points to 4.3% for the year, as slowing revenue outpaced even our pre-emptive cost reductions. This was mainly because we maintained our branch infrastructure ready for the rebound in our business.", said John Bowmer, Adecco's CEO. "Slower growth required less working capital and we used the cash surplus to pay off debt and to upgrade branch equipment. We start 2002 with an excellent cash position, well-equipped branches and a much enhanced debt structure."
In October 2001 Adecco announced its new division-based organisational structure, creating three divisions, namely Adecco Staffing, Ajilon Staffing & Managed Services and Career Services/e-Business.
In Adecco Staffing, 2001 revenues were up 3% from last year to CHF 23.5 billion. In Ajilon Staffing & Managed Services revenues were down 8% to CHF 3.3 billion, while in Career Services/e-Recruitment revenues increased by 52% to CHF 438 million.
For comparative purposes, the performance by business lines was as follows: revenues from those areas of the business formerly categorized as specialty brands fell 6% year-over-year to CHF 3.3 billion. In the quarter, revenues from these areas were down 24%.
In North America, 2001 revenues were down 5% from last year to CHF 7.6 billion, both in local currency and in CHF. Europe posted 5% revenue growth to CHF 16.5 billion. In local currency, revenues were up 8% showing a 3% negative currency effect in the region. In Asia Pacific, revenues were up 6% to CHF 2.4 billion. In local currency, revenues grew by 19% showing the sharp negative effect of the depreciation of the Japanese Yen and the Australian Dollar against the Swiss Franc in 2001. Rest of World revenues were up 22% to CHF 791 million, a 30% growth in local currency.
In the fourth quarter, revenues in local currency fell 17% in North America and 6% in Europe. In Asia Pacific revenues grew by 12%, while in the Rest of World revenues grew by 27%.
Comments"We are pleased with our performance in all geographies in light of tough business conditions last year. Except for North America, all regions posted year-over-year revenue growth", said Mr Bowmer. "Growing countries helped to offset declining markets and kept sales and profit volatility within a manageable range. The counter-cyclical businesses in our portfolio, such as Lee Hecht Harrison, mitigated the drop in operating profit and margins. "
Recognizing that it is difficult to predict the course of economies in the near-term, Mr Bowmer stated:
"If the experiences of previous slowdowns in the last twenty-five years are repeated, we expect a difficult first and maybe even second quarter as we compare the first half of 2002 against a strong first half 2001. Although there is no sign yet, we do believe that declines in volume have bottomed and markets have stabilised and we expect an upturn by mid year.
Implementing change of leadership
Klaus J. Jacobs will at the next general assembly step down as chairman of Adecco as already announced earlier. John Bowmer, the long time successful CEO of the company will succeed him as Chairman. Jérôme Caille will take over from John Bowmer as CEO of the group. Jérôme Caille was appointed President of the Adecco staffing business in October 2001, following his success as a country manager for Italy since 1997, where the business in that country has grown from small beginnings to capture for itself the biggest percentage share of any individual Adecco geographical market. John Bowmer states: "Jérôme Caille is the ideal person to cope with the rapidly changing environment of the labour market. I am confident that he will ensure Adecco is in prime condition to meet the exciting challenges ahead of the Adecco Group"
A detailed addendum on this subject follows this release.
Investment in e-Recruiting
Adecco SA today announced that it is making a recommended cash offer to acquire all of the issued and outstanding share capital of jobpilot AG. The acquisition of jobpilot will create a leading European online staffing, recruiting and service company by combining jobpilot's internet platform with the physical assets of Adecco.
The acquisition brings together Adecco - the global staffing industry leader - and jobpilot, one of the most comprehensive and innovative full service e-Recruitment providers on the web. "This is a perfect strategic fit for us", comments Bernard Morel, president of Adecco's Career Services/e-Business Division. "The Adecco Group has a long standing commitment to innovation in e-Recruitment, witnessed by our significant investment in technology initiatives in the last three years and the refocusing of our group structure last year to reflect the strategic importance of this business line. Our strategy combines integrating the web into existing businesses and developing successful new web based businesses - making the vision of 'business on a browser' closer to realisation. jobpilot represents an excellent nucleus for our e-Recruitment business, which we see as a strategic priority for Adecco." The combination of Adecco and jobpilot is expected to generate significant synergies in terms of incremental revenues through cross-selling and potential cost savings through combined infrastructure investments and shared international location.
A detailed addendum on this subject follows this release.
Board of Directors to Propose Dividend at the Annual General Meeting
The Board of Directors of Adecco will propose a dividend of CHF 1 per share (CHF 1 in 2000) for the approval of shareholders at the Annual General Meeting scheduled to take place on April 17, 2002.
US GAAP Results
For the full-year ended December 30, 2001 Adecco reported under US Generally Accepted Accounting Principles (US GAAP) revenues of CHF 27.2 billion and a net loss of CHF 427 million after charging goodwill amortisation of CHF 1,106 million and one-time charges of CHF 23 million incurred in the first quarter of 2001, of which CHF 15 million relates to Internet investment write-down and CHF 8 million (net of tax) for cumulative effect of accounting changes resulting from the adoption of the Financial Accounting Standards Board statement No. 133, as amended, "Accounting for Derivative Instruments and Hedging Activity".
According to Chief Financial Officer, Felix Weber, "This net result reflects the accounting principles of US GAAP and Adecco's chosen goodwill amortisation schedule of five years. Adecco considers operating income and income before amortisation of goodwill, restructuring costs and one-time items 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."
On July 20, 2001 the Financial Accounting Standards Board issued two new statements, SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". The standard requires goodwill and other intangible assets deemed to have indefinite lives, to no longer be amortised but rather be subject to an annual impairment test. Intangible assets with definite lives will continue to be amortised over their estimated useful lives.
"The adoption of FAS 142 will have a significant impact on Adecco's future financial statements", said Mr Weber. "In 2002, Adecco will no longer amortise current goodwill, thereby eliminating anticipated annual goodwill amortisation of approximately CHF 850 million. Amortisation of goodwill for the year ended December 30, 2001 was CHF 1,106 million. In the attached 2001 financial information, goodwill amortisation is presented before tax effect."
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 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: our ability to successfully implement our growth and operating strategies, fluctuations in interest rates or foreign currency exchange rates, changes in economic conditions, changes in the law or government regulations in the countries in which Adecco operates, instability in domestic and foreign markets, our ability to obtain commercial credit, and changes in general political, economic and business conditions in the countries or regions in which Adecco operates. 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
ADDENDUM ONE: ADECCO MAKES A RECOMMENDED CASH OFFER TO ACQUIRE JOBPILOT, A LEADING EUROPEAN ONLINE RECRUITMENT COMPANY
ADDENDUM TWO: ADECCO ANNOUNCES PLANNED SENIOR APPOINTMENTS: NEW CHAIRMAN AND NEW CHIEF EXECUTIVE OFFICER
Adecco SA is a Forbes 500 company and the global leader in HR Solutions. The Adecco network connects up to 700,000 associates with business clients each day through its network of over 30,000 employees and close to 6,000 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.
The Group comprises of three Divisions, Adecco Staffing, Ajilon Staffing & Managed Services; and Career Services/e-Business: 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 Staffing and Managed Services offers an unrivalled range of specialised branded businesses; Career Services/e-Business encompasses our portfolio of e-recruiting, executive search and outplacement businesses.
Adecco SA is registered in Switzerland and is listed on the Swiss Exchange (ADEN / trading on Virt-x: 1213860), NYSE (ADO), Euronext Premier Marché (12819).