strong performance in an uncertain environmentNovember 03, 2020
strong performance in an uncertain environment
Improving revenue trend and leading margin performance in Q3 2020
Summary and highlights
- Revenues down 15% year-on-year organically1 and trading days adjusted (TDA), and down 18% on a reported basis, with broad-based improvement as the quarter progressed
- September revenues down 14% organically and TDA, and October volumes showed further gradual improvement
- Gross margin up 20 bps yoy to 19.6% (up 40 bps organically), supported by strong performance of LHH (career transition), pricing discipline and reduced Covid-19 related impact
- Resilient EBITA2 margin excluding one-offs3 of 4.5%, with organic recovery ratio at 64%, supported by strength and balance of portfolio, and agile cost management
- Strong cash flow and balance sheet with cash conversion of 153% and net debt/EBITDA excluding one-offs at 0.5x
- Restructuring charge of EUR 89 million in Q3 2020, primarily related to real estate rationalisation and transformation of the Group’s operations in Germany
- Continued investment and progress in the Group’s strategic priorities
“While the market environment remained challenging in Q3, we saw a gradual recovery in business activity as lockdowns were eased. Against a backdrop of uncertainty, we continued to successfully navigate the crisis – putting the health and safety of our people first, delivering on the evolving needs of our clients, and supporting almost 150,000 associates back to work since the trough of the crisis.
The scale and breadth of our business and proactive account management approach has positioned us well to benefit from the increased demand in sectors such as e-commerce and logistics. Despite lower revenues overall, profitability was strong as we maintained price discipline and demonstrated agile cost management. The balanced portfolio we have built continues to be a differentiator, with LHH delivering double-digit growth and our outsourcing, consulting and up/re-skilling businesses proving more resilient than traditional staffing and recruitment. Cash flow continues to be a focus and was strong again in the quarter.
We have maintained focus on our strategy to Perform, Transform and Innovate. It is clear that recent investments in IT infrastructure and digital products have been enablers during this crisis and we continue to develop and roll out new technology and tools in line with our long-term transformation and product roadmaps.
Looking ahead, we are prepared for the recovery to be bumpy given the rapidly evolving Covid-19 situation. While much uncertainty prevails, we are confident in our ability to steer through these turbulent times and are focused on emerging stronger from the crisis, by maintaining focus on our strategic priorities. As an essential service provider, the Adecco Group also has an important role to play in supporting economies and individuals to get back to work.
I would like to thank our valued customers for placing their trust in us, and share my deep gratitude to our employees and associates for their continued hard work, endurance and tenacity.”
Alain Dehaze, Group Chief Executive Officer