November 6, 2018 / 6:22 AM / a year ago

Adecco says global economic uncertainty is affecting hiring

ZURICH (Reuters) - Adecco Group (ADEN.S), the world’s biggest staffing group, said hiring had slowed since the start of the fourth quarter, confirming a weaker trend as economic uncertainty makes companies more cautious.

FILE PHOTO: The logo of Swiss Adecco Group is seen at its headquarters in Zurich, Switzerland October 30, 2018. REUTERS/Arnd Wiegmann

The Swiss company’s results are closely watched for clues about the health of the broader global economy.

On Tuesday it said a fall in demand for car industry workers along with a slowdown in manufacturing and retail jobs in Europe weighed on its revenues, which grew just 1 percent in September-October from a year earlier.

For the July-September quarter revenue growth - when adjusted for trading days and currency changes - halved to 2 percent, from 4 percent in the second quarter, it said.

The company said the situation reflected earlier comments about tough markets in Europe and that sales from placing office and blue-collar workers in the United States and Britain was flat in the three months ended Sept. 30.

“In September we said we didn’t see the growth picking up after the summer period ... the growth we saw is not coming back,” Chief Financial Officer Hans Ploos van Amstel told reporters.

Rivals Randstad (RAND.AS) and ManpowerGroup (MAN.N) have also reported slowing revenue growth during their third quarter, reflecting greater caution among companies in adding to their workforces.

Adecco said revenues in Germany, Austria and Switzerland, along with the Benelux countries and Scandinavia, fell in the third quarter.

Ploos van Amstel said southern Europe was “levelling off” after strong growth over the past few years, but described the group’s overall situation as “positive stability,” adding conditions had not worsened during October.

Adecco shares had fallen nearly 36 percent this year, but gained 3.1 percent on Tuesday after its results.

“We believe that the share of Adecco has anticipated a lot of the current economic downturn that will impact the company’s profitability,” said Baader Helvea analyst Christian Weiz.

The euro zone economy grew at its weakest pace in more than four years during the third quarter as the public mood darkened, with signs of distress in Italy highlighting concerns that the bloc’s third-ranked state is becoming one of its weakest links.

Adecco’s Chief Executive Alain Dehaze said trade tensions between the United States and China had not hit hiring intentions, at least not yet.

“At this stage we do not see any impact,” he said. “In general it takes time to see a potential impact given the manufacturing process takes rather a long time until new goods are imported and exported.”

FILE PHOTO: The logo of Swiss Adecco Group is seen at its headquarters in Zurich, Switzerland October 30, 2018. REUTERS/Arnd Wiegmann

Adecco said quarterly revenue rose to 5.99 billion euros ($6.8 billion), matching estimates in a Reuters poll of analysts.

Net profit increased to 270 million euros, beating forecasts for 221 million as the company reduced costs.

Earnings were also boosted by 113 million euros gained from Adecco’s sale of its stake in staffing software company Beeline.

Reporting by John Revill; editing by Thomas Seythal and Susan Fenton

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