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Underlying margin progress in Q3 2018
UNDERLYING MARGIN progress in Q3 2018
November 6, 2018

UNDERLYING MARGIN progress inQ3 2018

Delivering GrowTogether productivity savings while investing in strategic initiatives

Summary and highlights

  • Revenue growth 2% organically1 and trading days adjusted (TDA)
  • Continued outperformance in France; revenues up 5% with improved margin trend
  • Strong performance in permanent placement, revenues up 19% organically
  • Gross margin 18.7%, up 20 bps year-on-year, driven by perm, General Assembly and Vettery
  • EBITA2 margin excluding one-offs3 5.0%; underlying productivity gains offset by investments in strategic initiatives (-30 bps yoy) and Germany (-20 bps yoy)
  • Net income attributable to Adecco Group shareholders EUR 270 million
  • Revenues in September and October combined up 1%, organically and trading days adjusted
  • Sale of Beeline stake completed resulting in gain-on-sale of EUR 113 million

“As we communicated during our September investor seminar, trading in Q3 2018 was challenging, with growth slowing in a number of European markets. Against this backdrop, overall the Group delivered a solid performance. Organic revenue growth was 2%, including improved performances in Japan and Rest of World, and another quarter of significant outperformance in France, our largest market.

Our businesses responded decisively to the slowdown in market growth, making the appropriate cost adjustments to protect our margin. And while ongoing strategic investments and the transformation of our German business impacted the headline EBITA margin, we made good progress in improving underlying profitability. GrowTogether is now scaling up and delivering real results in the markets where it is most progressed, such as the US, UK and France. We will deliver the EUR 50 million productivity savings target in 2018, on the way to EUR 250 million in 2020. And as we do so, we are further differentiating our solutions, building a digitally-enabled offering that will support future growth.

As the Group’s digital transformation builds momentum, it is the passion and commitment of our colleagues around the world that is making it a reality. Creating a positive and inspiring work environment is vital to our success. I am therefore delighted to report that the Adecco Group ranked in the top five ‘World’s Best Workplaces’, for the second year running, according to the recently published 2018 Great Place to Work® survey.”

Alain Dehaze, Group Chief Executive Officer

1 Organic growth is a non-US GAAP measure and excludes the impact of currency, acquisitions and divestitures.

2 EBITA is a non-US GAAP measure and refers to operating income before amortisation and impairment of goodwill and intangible assets.

3 In Q3 2018, EBITA included one-offs of EUR 4 million, of which EUR 2 million relating to restructuring costs and EUR 2 million relating to acquisition integration costs.

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