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Q3 2002 Adecco SA confirms improved trends in the third quarter

Adecco Staffing shows positive sales growth

Chéserex, Suisse, Oct 23, 2002 

  • Positive growth in sales and market share gains in major markets for Adecco Staffing
  •  Gross margin stabilisation and even stronger recovery in Ajilon Professional's gross margin
  •  Productivity improvement due to substantial cost reduction
  •  Reduction of Days Sales Outstanding by three days and generation of cash-flow from operating activities of CHF 288 million in the nine months
  •  Adecco well-positioned for current economic environment
 Adecco SA, the worldwide leader in HR solutions, today announced its results for the three months ended September 29, 2002. Revenues for the third quarter were CHF 6.4 billion, 1% below the corresponding period of last year in local currency, and above last year in August and September, confirming a sequential quarter-over-quarter improving trend since the beginning of the year. In CHF, revenues were down 9%. Operating income was CHF 201 million, down 42% in CHF and 37% in local currency. Income before amortisation of intangibles was CHF 120 million for the third quarter, down 43% in CHF and 38% in local currency. In the quarter, unfavourable currency fluctuations negatively affected revenues and operating income by 8% and 5%, respectively.
For the nine months, the company reported revenues of CHF 18.8 billion, down 10% in CHF and 5% in local currency. Operating income of CHF 572 million was down 41% in CHF and 37% in local currency. Income before amortisation of intangibles was CHF 322 million for the nine months of 2002, down 44% in CHF and 40% in local currency.
"We are happy to see that Adecco Staffing is showing positive growth in the third quarter. We have achieved market share gains in major markets, while gross margins have stabilised for the Group and have recovered strongly in Ajilon, our professional staffing division. As we were able to maintain our branch network, while reducing our costs we achieved substantial productivity improvements. Our strategy of carefully building and managing our branch network will further strengthen our market position to increase market share and to increase sales in a recovery without major cost addition." said Jérôme Caille, Adecco's CEO.
Divisional Performance
Adecco Staffing reported positive sales growth in local currency in the third quarter. While profits remain below last year as a result of the lagging recovery of the permanent placement business, these positive results demonstrate management focus on sales and profitability enhancement. For the nine months, the division posted revenues of CHF 16.5 billion, 8% below last year's figures in CHF and 3% down in constant currency.
Ajilon Professional revenues declined 27% to CHF 1.9 billion in the nine months, a 24% drop in local currency. The division achieved profitability improvement in Q3, as a result of a division wide effort aimed at restoring gross margins and aligning its cost base to trading conditions.
LHH Career Services increased revenues by 14% to CHF 328 million for the nine months, a 22% increase in local currency.
Jobpilot e-HR reported revenues of CHF 14 million for the nine months. The integration of Jobpilot continued as planned.
"All divisions showed positive developments. " continued Mr. Caille. "In the quarter we achieved the sales turnaround in Adecco Staffing with higher sales in local currency than a year ago. Ajilon Professional has successfully improved profitability by aligning its cost structure to the market conditions. LHH Career Services sustained sales and profit on a very high level and Jobpilot is on track to turning profitable."
The management of Adecco expects a positive first half of 2003, although short-term results are likely to be affected by the current economic environment.
Jobpilot AG Acquisition
As previously announced, the jobpilot AG AGM of August 22, 2002 voted in favour of a mandatory sales of the remaining shares not owned by Adecco against payment of a cash consideration in the amount of Euro 5.30 per share (squeeze-out). The resolution was filed with the Commercial Register and was registered on October 18. Quotation of the shares in Jobpilot AG at the Frankfurt Neuer Markt was lifted at the same day. The transfer of the remaining shares against payment of the consideration will occur on October 23.
US GAAP Results
For the nine months ended September 29, 2002, Adecco reported under US Generally Accepted Accounting Principles (US GAAP) revenues of CHF 18.8 billion and a net income of CHF 317 million, including CHF 5 million amortisation of other intangibles.
According to Chief Financial Officer, Felix Weber, "Adecco continues to consider operating income and income before amortisation of intangibles 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 distribute dividends."
Effective from fiscal year 2002, Adecco has adopted SFAS No 142, which requires that goodwill and other intangibles with indefinite/infinite lives no longer be amortised, but be subject to an annual impairment test. Intangibles with definite lives however continue to be amortised over the related lifetime.
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 bevolatile 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 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 nearly 6,000 offices in 62 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 four Divisions, Adecco Staffing, Ajilon Professional, LHH Career Services and Jobpilot e-HR Services. 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 Professional offers an unrivalled range of specialised branded businesses; LHH Career Services encompasses our portfolio of outplacement and coaching; Jobpilot e-HR focuses on online recruiting activities for the Group.
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).
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Oct 23, 2002