Adecco SA, the world’s largest provider of temporary workers, reported first-quarter revenue that beat analysts’ estimates as accelerating European economic growth prompted companies to hire.
Sales rose 5 percent to 5.33 billion euros (US$6.06 billion) from 5.08 billion euros a year earlier, Glattbrugg, Switzerland-based Adecco said in a statement yesterday.
That beat the 5.28 billion-euro average of six analyst estimates compiled by Bloomberg.
Earnings before interest, taxes and amortization (EBITA) fell 4 percent to 228 million euros. Revenue from France, Adecco’s biggest market, rose 7 percent to 1.1 billion euros.
“France is slowly recovering,” chief executive officer Alain Dehaze, who took over the role in September last year, said on Bloomberg TV. “It’s not an explosive recovery, it’s a continuous recovery.”
Adecco is a bellwether for the global economy, as companies use recruitment services to bring in temporary staff when business prospects are rising.
A renewed drop in consumer prices in April overshadowed the eurozone’s fastest economic growth in a year and prompted warnings from the European Central Bank about its effect on wages.
As unemployment declined in March to the lowest since 2011, the European Commission told the 19-nation bloc’s largest economies to reduce debt and modernize labor markets.
The company completed its acquisition of Penna Consulting PLC, announced in March in an attempt to expand in the UK market. First-quarter revenue from the UK and Ireland, which make up Adecco’s third-largest market, were unchanged at 545 million euros. The acquisition came as the UK debates the merits of being part of the EU ahead of a June 23 referendum.
Adecco has fallen 10 percent this year in Zurich trading, slightly beating the benchmark Swiss Market Index, which has declined 11 percent in the period. Earlier this year, the stock was at its cheapest since 2008 relative to the main Swiss equity gauge. It is now trading 11.3 times its estimated earnings as the gap has been narrowing.
First-quarter net income fell 10 percent, to 144 million euros. Adecco reiterated its target for EBITA margin of an average of 4.5 percent to 5 percent through 2020, after cutting it at the start of this year. In the first three months, it narrowed to 4.3 percent of revenue from 4.6 percent.
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