Employment services firm Adecco posted a 5 per cent drop in second-quarter net profit and cautioned it faced further contraction in Europe and Japan as well as tough conditions in the United States.
Quarterly net profit fell to €212 million, but beat the average estimate of €153 million in a Reuters poll of 12 analysts, as a one-off €36 million gain from modified French social charges boosted the bottom line.
Adecco is anticipating continued weak markets in the USA and Canada fort he rest of the year, while in Europe and in Japan a further market deceleration is expected.
Adecco said it was still committed to reaching an operating margin in excess of 5 per cent in 2009, but said this target becomes increasingly ambitious with further weakening of the economic environment.
"Overall the numbers came in better than expected. The net profit came in around 12 per cent higher than our consensus. Sales were a little weaker - down 1 percent, when a rise of 1 per cent had been expected," said Vontobel analyst Scott Weldon.
"But the margin improvement was fantastic and they reiterated their guidance on the operating margin. This was a strong performance in terms of cost control," he said.
Adecco, which has been trying to improve profitability by moving into the higher-margin professional and permanent staffing, made no comment on its bid approach to Britain's Michael Page announced last week.
Staffing firms, such as America's Manpower and Dutch group USG People, have seen second-quarter profits tumble with companies cutting back on hiring as economies slow.
Operating profit for the period fell 3 per cent to €316 million on sales down 1 per cent at €5.2 billion, while its operating profit margin for the period was 5 per cent.
Adecco trades at nine times expected 2009 earnings, compared to Dutch rival Randstad's multiple of 7.5 and Manpower's 10.
Reuters