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Adecco SA Announces 34% Increase in Revenues and 35% Increase in Profitability for 1998

Double Digit Growth Highlights 1998 Results for Global Staffing and Career Services Leader

Lausanne, Suisse, Feb 3, 1999 

decco SA, the world's leading provider of staffing and career services, today announced continued strong financial results for the year 1998, highlighting the success of the Company's global growth strategy in its worldwide markets.

Adecco's consolidated results for the year 1998 include revenues of CHF 15.3 billion, a 34% increase over the CHF 11.4 billion reported in the twelve-month period of 1997. Measured at constant exchange rates, revenue growth actually increased 36%, indicating a 2% negative impact on revenues from a stronger Swiss franc versus several currencies. Operating income for the period increased 35%, rising from CHF 480.2 million in the twelve-month period of 1997 to CHF 646.8 million for the same period of 1998. Operating margin for the full year was identical to 1997 at 4.2%. Operating expenses were kept well under control, declining from 14.4% of sales in 1997 to 13.0% in 1998 and demonstrating solid improvement for the full-year. Income before amortisation of goodwill for the year was CHF 406.4 million, a 35% increase (37% increase at constant exchange rates) over the CHF 301.3 million earned in 1997.

John Bowmer, Adecco's Chief Executive Officer, commented on the results, saying, "We are extremely pleased with our 1998 results. Our strong revenue and profit growth in all our businesses exceeded the expectations we had at the beginning of the year. Through improved productivity we've been able to offset pricing pressures and declining gross margins and hold the line on our operating margin despite the integration of TAD."

Progress Across the Globe 

Adecco's annual results indicate the Company's industry leadership and growth in the major employment markets that collectively account for over 90% of staffing industry revenues. A local currency comparison of twelve months ended December 1998 to the same period of 1997 reveals revenue increases of 36% in Switzerland, 35% in France, 32% in Spain, 31% in Canada, 29% in the United Kingdom, 23% in Germany, 20% in Australia, and 15% in the Netherlands.

Adecco's performance in the United States was accentuated by a 56% jump in revenues and an over-proportional increase of 68% in operating profit in local currency for the year.

Mr. Bowmer commented on the US profits, saying, "I am pleased with our progress in the United States. We have now successfully completed the integration of TAD. We have captured cost synergies greater than we had anticipated at the time of the merger, and the full year effect of these savings will boost profits further in 1999."

"Our worldwide performance is a result of the strength of our operations in individual markets, of the strength of the management teams we have in place, and of the strength and quality of our service staff." Mr. Bowmer said, reflecting on the positive global results. "The strong growth we've seen in our major markets is an indication of our success as a truly global staffing services provider."

Commenting on Adecco's prospects for the future, Mr. Bowmer noted, "In 1998 we've invested heavily in the future. We added over 200 new branches, greatly expanding our capacity. We've launched our business in Italy, which will emerge as one of the key markets for our business over the next few years. We've focused on the fundamental drivers of our business. We value our client relationships. We value our management team and service staff. Adecco's strategy is clear, and we have the global network, systems, and talented people to make it work."

Board of Directors to Propose a CHF 7.00 Per Share Dividend 

The Annual General Meeting of the Shareholders of Adecco is scheduled for April 20, 1999. At this meeting, the Adecco's Board of Directors will propose for the approval of the Shareholders, a dividend of CHF 7.00 per share (CHF 1.40 per participation certificate), representing a 27% increase over the CHF 5.50 per share (CHF 1.10 per participation certificate) paid in 1997.

US GAAP Results 

For the year 1998, Adecco reported under US Generally Accepted Accounting Principles (GAAP) revenues of CHF 15.3 billion and a net loss of CHF 194.8 million after charging goodwill amortization of CHF 601.2 million.

According to Chief Financial Officer Felix Weber, "Adecco considers operating income and income before amortization of goodwill to be the most relevant benchmarks of the company's financial performance. These benchmarks measure our operational performance and our ability to fund growth and to distribute dividends."


Financial Highlights 

In CHF Millions
Year Ending 
Year Ending 
% Change
Operating Income
Income Before Amortisation of Goodwill
Amortisation of Goodwill
Net Loss

Revenues by Region 

CHF Mio.
Year Ending 
Year Ending 
% Change
33 %
Rest of Europe
26 %
North America
52 %
Rest of World
34 %
Specialist/Career Services Brands
(included in geographic regions)
37 %

Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various 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: the Company's ability to mitigate the effects of 1997 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; 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.

Adecco SA is the global leader in employment services, connecting an average of 400,000 associates with business clients each day through its network of over 16,000 employees and 3,000 offices in 50 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. Adecco is also positioned as a worldwide leader in each of the major professional staffing segments with several world-class business lines: Accountants on Call and Jonathan Wren for Finance, Banking and Accounting; Ajilon 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. Adecco also presents a very strong range of HR solutions with Lee Hecht Harrison, offering outplacement and career management services.

Adecco clients retain this unique range of services through local, national, and multinational contracts.

For presentation purposes Adecco has indicated its year-end as December 31, whereas the Company's fiscal year ends on the Sunday nearest to December 31. For 1998 the fiscal year contained 53 weeks and ended on January 3, 1999.

The company was formed in August, 1996 by the merger of Adia SA of Switzerland and Ecco SA of France. Adecco SA is listed on The Swiss Exchange [ADECCO I (ADE -136973); ADECCO PS (ADEP - 136963)], the Bourse de Paris [RM 12819] and NASDAQ [ADECY].

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