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UPDATE 2-Brexit hiring hold hits Adecco revenue, shares drop
August 10, 2017 / 5:43 AM / a month ago

UPDATE 2-Brexit hiring hold hits Adecco revenue, shares drop

* CEO more optimistic about European economic development

* Brexit weighs on hiring in UK professional staffing

* Shares down 5 pct at 0936 GMT after results lag peers (Adds CEO comments, share price reaction, analyst)

By John Revill

ZURICH, Aug 10 (Reuters) - Adecco shares fell 5 percent on Thursday after its results lagged rivals Randstad and Manpower as a Brexit hiring slowdown hit revenues from IT and finance workers in Britain.

The Swiss recruitment firm reported a 1 percent rise in net profit to 192 million euros ($225.3 million) in the three months ended June 30, just missing the average analyst estimate of 194 million euros in a Reuters poll.

But Adecco said its underlying sales grew 6 percent during the second quarter, the same rate as the first three months, while growth in July had continued at a similar rate.

“I am definitely more optimistic than I was three or six months ago...With today’s knowledge, we see this growth continuing,” Chief Executive Alain Dehaze told Reuters.

Sales rose to 5.97 billion euros from 5.7 billion euros a year earlier, just below expectations of 6.03 billion euros.

“Organic growth and margin development was slightly below expectations, and in the current negative market environment if companies disappoint then the shares suffer a bit more than usual,” Bank Vontobel analyst Michael Foeth in Zurich said.

Dehaze, who heads the world’s largest staffing company said he was more optimistic about the European economy after strong growth in France, Iberia, and Italy during the second quarter.

But recruitment of professional staff in Britain fell as companies held off hiring new employees while the country negotiates its exit from the European Union.

Adecco reported accelerated growth in France, its biggest market, buoyed by extra hiring by automotive companies as well as the construction and logistics sectors.

But in Britain and Ireland revenues from the permanent placement of office and factory staff were down 11 percent, and income from finding permanent jobs for more skilled workers fell 23 percent, the company said.

Revenue from placing temporary staff in IT, financial and legal jobs in Britain fell 6 percent, Adecco said, although there was an improvement in revenue from general staffing.

Adecco blamed Brexit for the downturn, with Chief Financial Officer Hans Ploos van Amstel saying he saw a divergence between Europe and Britain, where financial companies were holding off recruiting new staff.

CEO Dehaze said he thought the British hiring market would continue to be uncertain until more details of Brexit were worked out.

“I would expect stabilisation or a slight decline, but not a more significant deterioration,” he said. ($1 = 0.8521 euros) (Reporting by John Revill; editing by Michael Shields and Alexander Smith)

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