March 11, 2015 / 6:27 AM / 4 years ago

Adecco sees weak euro boosting demand for temporary workers

BERLIN (Reuters) - Adecco ADEN.VX expects a weak euro to boost demand for temporary workers at Europe’s exporters, putting the world’s biggest staffing firm by sales on track to hit its margin target in 2015 after fourth-quarter profit beat expectations.

Patrick De Maeseneire, CEO of Adecco Group, listens during the session 'Winning with Talent' in the Swiss mountain resort of Davos January 24, 2015. REUTERS/Ruben Sprich

Employment agencies like Adecco and Dutch rival Randstad (RAND.AS) are considered a good barometer of economic health since companies tend to hire temporary workers at the start of a recovery rather than commit to full-time recruitment.

After underlying sales growth excluding currency effects slowed to 2 percent in the fourth quarter, Adecco said revenue growth rebounded to 4 percent in January and February helped by a better outlook for its business in Europe and Japan.

“Europe is coming into positive territory. With this economic outlook we see a further improvement in our growth numbers,” Chief Executive Patrick De Maeseniere told Reuters, adding demand was “very strong” in Italy and Iberia.

With a more positive outlook, Adecco said it was on track to achieve its earnings before interest, tax and amortization (EBITA) margin target of over 5.5 percent this year. In the fourth quarter it had an EBITA margin of 5.3 percent.

Shares in Adecco, which have surged over 9 percent so far this year, gained 3 percent in early trade.

Recent data has suggested Europe, which accounts for 60 percent of Adecco’s revenue, is turning the corner sooner than anticipated just as the European Central Bank fires up a money printing program worth more than 1 trillion euros.

But the pace of growth across factories in euro zone remained modest in February, suggesting any recovery is being driven by consumers.

While geopolitical concerns may have weighed on investment decisions in the second half of last year, Adecco expects the weak euro — which is languishing close to 12-year lows — to feed into higher orders for manufacturers.

“It’s only a question of time that export-orientated companies in Germany will start to re-accelerate,” Chief Financial Officer Dominik de Daniel told Reuters.

Net profit came in at 185 million euros ($197 million) compared to 174 million a year earlier, while sales rose to 5.17 billion euro. Analysts in a Reuters poll had forecast profit of 153 million euros and sales of 5.2 billion.

After increasing its dividend 11 percent last year, the company proposed a payout of 2.10 Swiss francs ($2) per share for 2014, up 5 percent.

($1 = 0.9355 euros) ($1 = 0.9986 Swiss francs)

Reporting by Caroline Copley; editing by Thomas Atkins and Keith Weir

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