Posted by: garispang | August 12, 2009

Adecco Has Surprise Quarterly Loss, Sees No Rebound

AdeccoAug. 11 (Bloomberg) — Adecco SA, the world’s largest supplier of temporary workers, reported a surprise second- quarter loss and said it will deepen cost cuts as sales continue to decline because fewer companies are hiring.

The net loss was 147 million euros ($208 million), compared with a profit of 212 million euros a year earlier, the Glattbrugg, Switzerland-based company said in a statement today. The deficit included 54 million euros in charges from an overhaul of the French, Benelux and Iberian units, as well as writedowns in Germany. Sales fell 31 percent to 3.6 billon euros.

“The revenue decline is bigger than expected, the restructuring charges are bigger than expected and the goodwill is a surprise,” Michael Foeth, an analyst at Bank Vontobel said. He recommends investors hold Adecco shares.

Adecco fell as much as 6 percent in Zurich trading after the company said it predicts “no material pick-up of business activities,” forcing management to deepen cost cuts across “various countries.” The rate of the revenue drop over the second quarter continued into July, Chief Financial Officer Dominik De Daniel said in an interview today.

Stock Falling

Adecco fell 2.95 Swiss francs to close trading in Zurich at 49.9 francs. The biggest drop since Nov. 20 gives Adecco a market value of about 9.44 billion francs and wiped out Adecco’s share gain in a year.

The company, led by Chief Executive Officer Patrick De Maeseneire since June, shed about 2,000 jobs in the quarter and told workers in France that an additional 350 jobs will be eliminated and 100 branches merged this year.

Analysts surveyed by Bloomberg had predicted a profit of 32.8 million euros for the quarter, on sales of 3.78 billion euros. The loss was Adecco’s biggest in at least eight years.

“A balance sheet clean-up is not unusual at the start of a new CEO,” Fabian Baumann, an analyst at Kepler Capital Markets, wrote in an e-mail to investors. He recommends buying the stock.

Joblessness in the U.S. and Europe increased in the second- quarter. Unemployment in the 27 countries that are members of the European Union rose for a tenth consecutive month to 8.9 percent at the end of June. Yesterday, A.P. Moller-Maersk A/S, the world’s largest container-ship operator, said it will cut 2,700 jobs to close its Lindoe shipyard in Denmark.

Takeover Bid

Adecco said today it will seek to buy London-based Spring Group Plc to expand in professional staffing and become the No. 2 staffer in the U.K. after Hays Plc. The offer of 62 pence for each Spring share values the target company at about 108 million pounds ($178 million).

Acquiring Spring Group would increase Adecco Group’s share of the U.K. market to almost 6 percent of the market, from 4.7 percent at the moment, De Maeseneire said in an interview. Spring focuses on information-technology staffing and engineering and has 80 percent of its business in the U.K.

Spring CEO Peter Searle, who worked at Adecco for six years would lead U.K. & Ireland region if the bid succeeds, De Maeseneire said. The takeover offer is backed by Spring Group’s biggest shareholder, ET Training LLC, which holds 36 percent, Adecco’s De Daniel said.

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