Full-year 2011 HIGHLIGHTS
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Revenues of EUR 20.5 billion, up 10% organically1
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Gross margin at 17.4%, down 40 bps (-60 bps organically)
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SG&A up 6% in constant currency (+4% organically)
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EBITA2 of EUR 814 million, up 13% (+14% in constant currency and organically)
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EBITA margin of 4.0%, up 10 bps (4.1% before EUR 20 million integration costs for MPS and DBM)
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Net income attributable to Adecco shareholders of EUR 519 million, up 23%
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Strong operating cash flow of EUR 524 million, up 15% (EUR 455 million in 2010)
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Increased pay-out ratio leading to a proposed dividend of CHF 1.80 per share, up 64%
Fourth quarter 2011 HIGHLIGHTS
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Revenues of EUR 5.2 billion, up 3% organically
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Gross margin of 17.9%, flat year-on-year, but up 70 bps sequentially (+50 bps organically)
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SG&A well controlled, flat sequentially on an organic basis and excluding integration costs
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EBITA margin of 4.2%, flat year-on-year (4.4% before EUR 12 million integration costs for DBM)
Key figures for 2011
in EUR millions |
FY 2011 |
|
Q4 2011 reported |
FY 2011 organic growth |
Q4 2011 organic growth |
---|---|---|---|---|---|
Revenues |
20,545 |
|
5,194 |
+10% |
+3% |
Gross profit |
3,566 |
|
930 |
+6% |
+1% |
EBITA |
814 |
|
217 |
+14% |
+3% |
Operating income |
763 |
|
206 |
|
|
Net income attributable to Adecco shareholders |
519 |
|
133 |
|
|
Adecco Group, the worldwide leader in Human Resource services, today announced results for the full year and Q4 2011. Revenues in 2011 were EUR 20.5 billion, an increase of 10% on an organic basis. The gross margin was 17.4%, down 60 bps year-on-year organically. Strong cost control resulted in only a 4% organic increase of SG&A in 2011. EBITA increased 14% organically compared to 2010, while the EBITA margin was 4.0%, up 10 bps year-on-year. The Group generated strong operating cash flow of EUR 524 million in 2011. The proposed dividend per share for 2011 is CHF 1.80, an increase of 64% compared to the dividend paid per share for 2010.
Patrick De Maeseneire, CEO of the Adecco Group said:
“In 2011 we achieved double-digit organic revenue growth for the second consecutive year. General staffing, especially the industrial segment, continued to lead growth, while professional staffing growth remained moderate. Geographically, Germany & Austria, Italy and Emerging markets all grew strongly double-digit. France grew 10% and North America was up 8% organically. Japan and Benelux grew slower, but performed better than the market. UK & Ireland and Iberia were clearly more challenging markets, with the latter facing declining revenues in the second half of 2011. With unemployment at high levels, scope for price increases was limited, and the gross margin was impacted by the business mix. Nevertheless, we continued to be disciplined and kept costs under tight control, leading to solid EBITA growth of 14% organically and an EBITA margin of 4.1% before integration costs. We continue to watch developments carefully and keep enhancing our profitability. In current times, our clients need flexibility and we have the right offering for them. With the good results achieved in 2011, continued price discipline and strict cost management, we are on track to reach our 5.5% EBITA margin target, midterm.”
FY 2011 FINANCIAL PERFORMANCE
The results of the acquired business of Drake Beam Morin Inc., (“DBM”) are included since September 1, 2011.
Revenues
Group revenues for 2011 were EUR 20.5 billion, an increase of 10% or 11% in constant currency compared to the prior year. Organically revenues were up 10% in 2011. Permanent placement revenues amounted to EUR 344 million, an increase of 20% in constant currency (+18% organically). Revenues from the counter-cyclical career transition (outplacement) business totalled EUR 206 million, a decline of 6% in constant currency or 16% organically.
Gross Profit
In 2011, gross profit was EUR 3.6 billion, an increase of 7% compared to 2010. Organically, gross profit increased by 6%. The gross margin was 17.4%, 40 bps lower than in 2010. Acquisitions added 20 bps to the gross margin in 2011. The negative impact from the French payroll tax subsidy cut was mitigated during 2011 through price increases, so that the impact at the Group level was negligible for the full year.
Selling, General and Administrative Expenses (SG&A)
SG&A increased by 6% compared to 2010 or by 4% organically. Integration costs for MPS and DBM amounted to EUR 20 million in 2011 (EUR 33 million for MPS and Spring in 2010). At year end 2011 the Adecco Group had over 33,000 FTE employees worldwide and a network of over 5,500 branches. Compared to year end 2010, on an organic basis, FTE employees were up 3% and branches were up by 1%.
EBITA
In 2011, EBITA improved by 13% to EUR 814 million. On an organic basis, EBITA increased by 14%. The EBITA margin was up 10 bps to 4.0%.
Amortisation of Intangible Assets
Amortisation was EUR 51 million in 2011, compared to EUR 55 million in 2010.
Operating Income
Operating income in 2011 was EUR 763 million, compared to EUR 667 million in 2010.
Interest Expense and Other Income / (Expenses), net
Interest expense was EUR 71 million in the period under review, which compares to EUR 63 million in 2010. Other income / (expenses), net was an expense of EUR 6 million in 2011, compared to a net expense of EUR 1 million in 2010. Interest expense is expected to be around EUR 80 million for the full year 2012.
Provision for Income Taxes
The effective tax rate for 2011 was 24% compared to 30% in 2010. The tax rate for 2011 was positively impacted by the reduction in withholding tax payable upon the distribution of dividends due to the ratification of the Swiss-Japanese tax treaty. The successful resolution of prior years’ tax audits in several jurisdictions in both years also positively impacted the tax rate.
Net Income attributable to Adecco shareholders and EPS
In 2011, net income attributable to Adecco shareholders was EUR 519 million (2010: EUR 423 million). Basic EPS was EUR 2.72 (EUR 2.20 in 2010).
Cash-flow, Net Debt 3 and DSO
Operating cash flow amounted to EUR 524 million in 2011. The Group invested EUR 148 million for DBM and EUR 109 million in capex in 2011. Dividends paid were EUR 149 million in 2011. Net debt at the end of December 2011 was EUR 892 million compared to EUR 751 million at year end 2010. In 2011, DSO was 55 days compared with 54 days in 2010.
Currency Impact
In 2011, currency fluctuations had a negative impact on revenues of approximately 1%.
Q4 2011 FINANCIAL PERFORMANCE
Revenues
Group revenues in Q4 2011 were EUR 5.2 billion, an increase of 4% in EUR and in constant currency compared to Q4 2010. Organically, revenues were up 3%. Permanent placement revenues increased 7% in constant currency to EUR 82 million, while revenues from the counter-cyclical career transition (outplacement) business totalled EUR 64 million, a decline of 6% organically.
Gross Profit
In Q4 2011, gross profit amounted to EUR 930 million and the gross margin was 17.9%, flat compared to Q4 2010. DBM added 30 bps to the gross margin this quarter. The temporary staffing business had a negative impact on the gross margin of 40 bps in Q4 2011. Permanent placement had a positive impact of 10 bps on the Q4 2011 gross margin, whereas the impact was +30 bps from the career transition business (neutral when excluding DBM). Sequentially, the gross margin was up 70 bps (+50 bps excluding DBM).
Selling, General and Administrative Expenses (SG&A)
SG&A in Q4 2011 amounted to EUR 713 million, an increase of 4% in EUR and in constant currency or 1% organically compared to Q4 2010. Sequentially, SG&A was flat on an organic basis and when excluding integration costs. Costs related to the integration of DBM totalled EUR 12 million in Q4 2011 (EUR 12 million for MPS and Spring in Q4 2010). Organically, FTE employees increased by 3% (+950), compared to the fourth quarter of 2010. Sequentially, the number of FTE employees organically was unchanged. On an organic basis, the branch network expanded by 1% (+65 branches) compared with Q4 2010.
EBITA
In the period under review, EBITA was EUR 217 million, up 3% in EUR, in constant currency and organically compared with the fourth quarter of 2010. The Q4 2011 EBITA margin was 4.2%, flat compared with Q4 2010.
Amortisation of Intangible Assets
Amortisation of intangible assets in Q4 2011 was EUR 11 million compared to EUR 14 million in Q4 2010.
Operating Income
In Q4 2011, operating income was EUR 206 million. This compares to EUR 197 million in the fourth quarter of 2010.
Interest Expense and Other Income / (Expenses), net
The interest expense amounted to EUR 20 million in the period under review, EUR 5 million higher than in Q4 2010. Other income / (expenses), net was an income of EUR 3 million in Q4 2011 compared to an expense of EUR 1 million in the fourth quarter of 2010.
Net Income attributable to Adecco shareholders and EPS
In the period under review, net income attributable to Adecco shareholders was EUR 133 million. This compares to EUR 141 million in Q4 2010. Basic EPS in Q4 2011 was EUR 0.71 (Q4 2010: EUR 0.73).
Currency Impact
In Q4 2011, currency fluctuations had no impact on revenues.