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REFILE-UPDATE 2-Adecco sees stalling jobs growth in parts of Europe
March 1, 2012 / 7:11 AM / 6 years ago

REFILE-UPDATE 2-Adecco sees stalling jobs growth in parts of Europe

(Refiles to remove extraneous word ‘hike’ from third paragraph)

* Q4 net profit 133 mln euros, vs forecast 123 mln

* Sales up 3 pct in Q4, rate of growth continued to slow

* Proposes 1.80 Swiss francs dividend, up 64 percent

* Shares up 7.0 percent

By Caroline Copley

ZURICH, March 1 (Reuters) - Top staffing group Adecco warned of slowing jobs growth in parts of Europe, after the Swiss company sweetened solid fourth-quarter results with a hefty dividend hike.

“We see there is a slowdown, especially in western Europe. We already saw the slowdown coming in Iberia and Italy in the third quarter,” chief executive Patrick De Maeseneire told Reuters in an interview on Thursday.

“Apart from Germany and some of the Nordic countries, it is happening everywhere in western Europe.”

Adecco, which is supplying staff for the London Olympics, raised its dividend 64 percent to 1.80 francs.

Its shares were up 7.0 percent by 1020 GMT, outperforming a 0.4 percent higher sector index.

“The long-term case for Adecco shares -- (a) focus on higher-margin speciality staffing, good geographic diversification and strict cost management -- appear to be intact,” Notenstein analysts said in a note.

“Adecco could also see further growth given a slightly more optimistic economic view in the key U.S. market.”

Demand for temporary workers often acts as a barometer for economic growth, as employers are wary of adding to permanent headcount when they are uneasy about the global economy.

Rivals Manpower, Randstad and USG People have spoken of slowing jobs growth in Europe as the region’s debt crisis hits hiring. Adecco makes two thirds of its revenue in Europe.

Net income in the fourth quarter was 133 million euros ($178 million), compared with a forecast for 123 million in a Reuters poll.

Adecco sales grew 3 percent to 5.19 billion euros, a slowdown from 7 percent constant-currency growth seen in the previous quarter and 17 percent in the 2010 period.

A TALE OF TWO EUROPES?

Europe’s festering debt crisis has weighed on growth in Europe, holding back hiring as unemployment soars.

Adecco noted a slowdown in Italy, which is expected to languish in a recession for much of this year, while revenue in Iberia dropped 8 percent due to the challenging economic environment.

In Germany, Adecco outpaced the market, with double-digit revenue growth in the fourth quarter. It said a slowdown in other parts of the region could cause Europe’s economic growth engine to sputter.

“With other European countries clearly in a recession, and these are important clients for an export oriented economy, it will also have an impact on Germany,” chief financial officer Dominik de Daniel said.

Revenue in France, Adecco’s biggest market with a 28 percent share, fell 9 percent in January, De Maeseneire said, hit by reduced capacity at automaker Peugeot, a key client.

As part of its aim to keep a tight control on costs, Adecco said it planned to cut 500 jobs in France as it merged two general staffing businesses.

In the United States, its second biggest market, revenue grew 2 percent in January, de Daniel said, supporting recent data suggesting the economy was brimming back to life.

De Maeseniere said the company, which bough Japan-based VSN at the start of the year, was open to bolt-on acquisitions, but ruled out any large buys. ($1 = 0.7476 euro) (Editing by David Holmes and Dan Lalor)

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