Adecco: Financial results highlights, with strong close to an unprecedented year

The Adecco Group delivered a resilient performance in 2020, despite the unprecedented public health and economic crisis, says their financial outlook. While revenues declined, due to Covid-19, gross margin remained strong and EBITA margin was well protected, thanks to the strength and balance of the portfolio and agile cost management.

Meanwhile, investments in the digitalisation and transformation of the Group were maintained, the ‘Perform, Transform, Innovate’ strategic cycle was brought to a successful close and the “Future@Work” cycle was launched.

FY20 revenues were down 15% organically and TDA in 2020, as the global economy was impacted by the Covid-19 pandemic. After a decline of 33% TDA in April, revenues progressively recovered through the year to reach a decline of only 2% TDA in December, as the Group re-focused resources on areas of growth, such as e-commerce. Gross margin improved organically by 30 bps, supported by price discipline and strong growth in the higher margin LHH business. EBITA margin excluding one-offs declined 80 bps organically, to 3.6%, with the impact of the revenue decline offset to a

significant extent by agile cost management and the benefit of structural productivity improvements from

Q4 2020 summary and highlights

•             Revenues down 5% year-on-year organically1 and trading days adjusted (TDA); Japan & Rest of World returns to growth, and Europe and North America continue to recover

•             Gross margin up 30 bps yoy to 19.6% (up 50 bps organically), supported by strong performance of LHH (career transition), positive impact of Covid-19 employment support schemes, and pricing discipline

•             EBITA2 margin excluding one-offs3 at 4.8%, up 10 bps yoy organically, with good ongoing cost management

•             Revenues in January 2021 down 2% organically and TDA, with volumes in February indicating a similar trend

FY 2020 summary and highlights

•             Revenues impacted by Covid-19 crisis, down 15% yoy organically and TDA; showing consistent improvement since the trough in Q2 2020

•             EBITA excluding one-offs of EUR 709 million, with a margin of 3.6%, down 80 bps yoy organically; strength and balance of portfolio, GrowTogether benefits and agile cost management largely mitigated crisis impact

•             Strong cash flow and balance sheet with cash conversion of 123% and net debt/EBITDA excluding one-offs at 0.4x

•             Proposed dividend of CHF 2.50 per share and resumption of EUR 600 million share buyback

Alain Dehaze, Group Chief Executive Officer: “At the beginning of 2020, few could have anticipated the challenges that the world would face. Covid-19 led to a health crisis and economic shutdowns that were unprecedented in recent history. The Adecco Group and my colleagues can be proud of the effectiveness with which we have navigated the crisis; maintaining business continuity, securing the wellbeing and safety of our associates and clients, and ultimately helping individuals and the economies in which we operate get safely back to work. I would like to sincerely thank our colleagues around the world for their efforts.

Despite the difficult market environment in 2020, financial performance remained resilient. After a sharp drop in Q2, we saw a consistent recovery in revenues through the second half of the year, as companies and individuals adapted to the new reality. We successfully pivoted towards growth areas, seeing more than 40% growth in e-commerce and logistics. Our digital capabilities and Onsite solutions contributed to market share gains across many geographies. As an essential service provider, we are playing an important role to support companies and individuals navigate the workforce transitions that have been accelerated by the crisis.

The Group remained solidly profitable, with an EBITA margin that was higher than during previous economic downturns, supported by our balanced portfolio, benefits from GrowTogether, and agile cost management. A rigorous focus on cash collection and our prudent capital structure helped maintain strong liquidity and a healthy cash flow and balance sheet. This allowed us to sustain important investments in IT and digital, and to uphold our dividend commitment.

 Throughout the crisis we remained focused on our strategic priorities – perform, transform and innovate. In December, we launched our new strategy – Future@Work – building on the progress of the last strategic cycle and which is underpinned by our clear purpose, as one of the world’s largest employers, to make the future work for everyone.”