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Adecco SA Reports 19% Operating Income Growth in First Quarter

Global Leader in Personnel Services Posts Double Digit Revenue Growth and 35% Increase in Income before Amortization

Lausanne, Suisse, Apr 19, 1999 

Adecco SA, the world's leading personnel services firm, today announced very good financial results for its first quarter, highlighting the success of its global strategy of both staffing and human resource services.

Adecco's first quarter 1999 unaudited results included revenue of CHF 3.74 billion, a 10% increase over the CHF 3.39 billion reported in the first quarter of 1998. At constant exchange rates, revenue increased by 12%, indicating a 2% negative impact on revenues from a stronger Swiss franc. Operating income grew a healthy 19% rising from CHF 112.9 million in the first quarter last year to CHF 134.4 million this year. Operating margins increased considerably from 3.3% in the first quarter of 1998 to 3.6% in 1999. Income before amortization of goodwill for the quarter was CHF 80.1 million, a 35% enhancement over the CHF 59.4 million earned in first quarter 1998.

John Bowmer, Adecco's Chief Executive Officer, commented on the results, saying, "We are especially pleased with our results for the first quarter, which show significant improvement in operating margins, resulting from better gross margins and continued control over expense growth."

Progress Across the Globe 

Adecco's first quarter results reflect the company's continuing leadership position and growth in the major employment market countries that collectively account for over 90% of industry revenues. A local currency comparison of first quarter 1999 to first quarter 1998 reveals revenue increases of 12% in France, 36% in Switzerland, 31% in Germany,

30% in Spain, 15% in the United Kingdom, and 2% in the USA. On a like for like basis after consideration of businesses sold and discontinued non profitable contracts arising from the TAD acquisition, the growth in the US market was 8% in local currency.

Reviewing the prospects for future performance, Mr. Bowmer stated, "The results we achieved in the first quarter come from proving time and again that Adecco is a client's optimal partner for recruiting and managing today's flexible workforce. In a very competitive environment, we were able to achieve significant progress, in market penetration, in sales and in particular in profitability. The French market is experiencing, as anticipated, a slowing down after a record growth in 1998. We have successfully continued in this market our margin increase policy. In the USA, the market slowdown already observed at the end of last year has continued, driven strongly by the historically low level of unemployment. This is in particular true for the general business, while we still see healthy growth in the professional staffing and service activities. We have successfully continued our program to enhance operating margins and focus on the specialty business. In sum, we achieved a more than 25% improvement of the US operating profit . Correspondingly, the operating margin has increased by close to 100 basis points. These results make us confident that we have today the right strategy, the right network, the right systems and the right people to achieve continued success."

US GAAP Results 

For the quarter ended April 4, 1999 Adecco reported under US Generally Accepted Accounting Principles (GAAP) revenues of CHF 3.74 billion and a net loss of CHF 71.1 million after charging goodwill amortization of CHF 151.2 million.

According to Chief Financial Officer Felix Weber, "Adecco considers operating income and net income before amortization of goodwill 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."

Unaudited Financial Highlights 

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

Revenues by Region 

in CHF millions
Quarter Ending
% Change
Local currency
% Change
12 %
Rest of Europe
20 %
21 %
*North America
-1 %
2 %
Rest of World
22 %
28 %
Specialist/Career Services Brands
(included in geographic regions)
27 %

* On a like for like basis , the increase in CHF was 6% after deduction of businesses sold or transferred and discontinued non-profitable contracts arising from the TAD acquisition. 

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 recent 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 personnel services, connecting up to 450,000 associates with business clients each day through its network of over 17,000 employees and 3,000 offices in 51 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 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. Adecco also presents a very strong range of HR solutions with Econova/Lee Hecht Harrison, offering 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 [ADECCO I (ADE -136973); ADECCO PS (ADEP - 136963)], the Bourse de Paris [RM 12819] and NASDAQ [ADECY].

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