Adecco bounces back after difficult year

Adecco ended the year on a high note Keystone

Adecco, the world’s largest employment agency, has announced a nine per cent increase in net profit to €332 million (SFr515 million).

The result put a shine on what was a difficult 2004 for the Swiss-based firm, which lost credibility and investors’ trust over suspected accounting irregularities.

On Wednesday Adecco reported a six per cent rise in revenue to €17.2 billion, as job markets recovered on the back of an economic upturn.

However, the company said its gross margin slipped to 16.7 per cent from 17 per cent, weighed down by pricing pressures.

The gross margin – a key indicator in the employment sector – represents gross profit (revenue minus cost of sales) as a percentage of revenue.

But Adecco, whose corporate headquarters are near Zurich, declared that it was aiming for further organic sales growth and margin improvement at or above market levels in 2005.

“A tough start to the year ended positively,” chief executive Jérôme Caille said in a statement. “We enter 2005 with confidence and momentum.”

Adecco added that it had halved net debt from €625 million to €299 million and would be increasing its dividend by 43 per cent to SFr1 per share.

Control weaknesses

Adecco’s management has been working hard to restore trust after it revealed major control weaknesses in its North American operations in January last year.

The employment agency delayed publication of its 2003 results, prompting Adecco stocks to plunge 35 per cent, wiping around SFr7 billion off the company’s value.

Investors lost billions and the chairman, finance chief and the head of Adecco’s North American operations all lost their jobs.

Earlier this month the United States Securities and Exchange Commission said it would not be taking action against the company, after completing an investigation into the affair.

Adecco said a preliminary investigation by the Swiss stock exchange had also ended without sanctions.

“Class-action lawsuits in the United States are still pending, although Adecco believes that there is no merit to the allegations, has filed a motion to dismiss, and will continue to defend itself vigorously,” the company said in a statement.

swissinfo with agencies

Key facts

Adecco is the world’s number one employment agency.
The group was formed in 1996 through the merger of Adia and Ecco.
It employs around 30,000 people in 71 countries.
Each year, the group places 4 million people with 250,000 firms.
In 2003 Adecco reported a 26% increase in net profit to SFr470 million.