Q1 2000 Adecco SA Reports 49 % Operating Profit Increase in First Quarter 2000

Adecco SA, the world's leading provider of personnel services today announced another set of excellent results for its first quarter 2000, highlighting the continuing success of its global growth strategy.

Adecco's first quarter 2000 unaudited results included net service revenues of CHF 5.1 billion, a 38% increase over the CHF 3.7 billion reported in the first quarter of 1999. Apart from a strong organic growth, the first quarter 2000 results benefited from an 8% currency translation impact in revenues, as a result of the appreciation of the US dollar, the British pound, and the Australian dollar against the Swiss franc. At constant rates, first quarter revenues increased 30% compared to last year's first quarter. Adecco posted strong operating income growth of 49% rising from CHF 134 million in the first quarter last year to CHF 200 million during the same period this year. Operating margins increased substantially by approximately 30 basis points from 3.6% in the first quarter of 1999 to 3.9% in 2000. Income before amortization of goodwill for the quarter was CHF 124 million, a 54% improvement over the CHF 80 million earned in first quarter of 1999.

After eliminating the currency translation impact, organic revenue growth was 19% and organic operating income growth was 24%.

"We have started the year 2000 with an extremely strong performance", said John Bowmer, Adecco's CEO. "This result was not only due to the contribution of our 1999 acquisitions, which are now fully integrated adding about 11% to our top line growth and 15% to the operating profit growth, but also as a result of substantial organic growth in this first quarter. Operating margins jumped around 30 basis points in response to our cost and account management strategy worldwide. We continue to move towards our medium term goal of a 5% operating margin. Despite the recent downturn in IT, we are optimistic that the IT staffing and service business, which, on a like-for-like basis, is now growing month on month, will end the year comfortably above 1999. These are symptoms of a healthy year ahead".

Olsten Merger 

As previously announced the Olsten acquisition was completed on March 15. Olsten results of operations will be consolidated starting April 3rd, 2000.

Commenting on the merger with Olsten, Mr. Bowmer stated, "The integration of Olsten will be our greatest challenge in the year 2000. I truly believe our management team is very well prepared to succeed using the experience of our earlier major successful integrations. The management teams are in place and our plans are well advanced. As in the Adia/ECCO and TAD mergers, we will incur integration costs and some synergies this year. The full benefits will thus be seen in the year 2001."

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 2000 to first quarter 1999 shows revenue increases of 24% in France, 10% in the USA, and double-digit growth above 20% in Switzerland and Spain, and above 30% in Belgium and the UK.

Very pleased with country performance, Mr Bowmer stated, "In these first three months we have witnessed substantial growth throughout Europe: France posted excellent results capitalizing on the strong economy, and Italy presented further exceptional results, nearly fivefold last year's first quarter revenues. In Spain we achieved significant cost savings following the deployment of new technology that increased back and front-office productivity. In North America, volume increases remain much the same as last year. In this year of exciting changes our first quarter results show that we remain focused on delivering value to our stakeholders".

Dividends 

As previously announced, Adecco shareholders are expected to approve the proposed dividend of CHF 8.40 per share (CHF 1.68 per participation certificate), payable on May 2nd, 2000.

US GAAP Results 


For the quarter ended April 2, 2000 Adecco reported under US Generally Accepted Accounting Principles (GAAP) revenues of CHF 5.1 billion and a net loss of CHF 68 million after charging goodwill amortization of CHF 192 million.

According to 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 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. It is important to note that the acquisitions integrated last year have created a positive operating income, thus having contributed positively already in the first year."