Q3 2023 report
Denis Machuel, CEO & Coram Williams, CFO
2 November 2023
1
Disclaimer & note on terminology
Forward-looking statements
Information in this release may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward- looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to the Adecco Group AG as of the date of this release, and we assume no duty to update any such forward-looking statements. The forward- looking statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations. Numerous factors could cause or contribute to such differences. Factors that could affect the Company's forward-looking statements include, among other things: global GDP trends and the demand for temporary work; the impact of the global outbreak of novel coronavirus disease (COVID); changes in regulation affecting temporary work; intense competition in the markets in which the Company operates; integration of acquired companies; changes in the Company's ability to attract and retain qualified internal and external personnel or clients; the potential impact of disruptions related to IT; any adverse developments in existing commercial relationships, disputes or legal and tax proceedings.
Non-US GAAP measures used
'Organic growth' excludes the impact of currency, acquisitions and divestitures. This presentation refers to revenue growth yoy on an organic, trading days adjusted basis, unless otherwise stated.
This presentation refers to gross margin development yoy on an organic basis, unless otherwise stated.
'EBITA' refers to operating income before amortisation and impairment of goodwill and intangible assets. This presentation refers to EBITA, EBITA margin and yoy margin development excluding one-offs, unless otherwise stated.
'Net debt' comprises short-term and long-term debt less cash and cash equivalents and short-term investments.
'Free cash flow' comprises cash flows from operating activities less capital expenditures.
'Cash conversion' is calculated as last 4 quarters of free cash flow before interest and tax paid (FCFBIT) divided by last 4 quarters of EBITA excluding one-offs.
'Conversion ratio' is calculated as EBITA excluding one-offs divided by gross profit.
'Net debt to EBITDA' is calculated as net debt at period end divided by last 4 quarters of EBITA excluding one-offs plus depreciation.
Q3 2023 results |
2 |
Q3 highlights
Further strong market
share gains
Productivity +6% yoy1
€24 mn G&A savings yoy
Year-endrun-rate G&A
savings ~€90 mn
New CHRO appointed
+930 bps relative growth
Productivity +5% yoy2,
reaches 2021 levels
Consulting +8%
EBITA margin +50 bps yoy
Continued strength in Career Transition, +84%
EBITA margin +430 bps yoy
Q3 2023 results 1 GP / FTE; 2 GP / Selling FTE |
3 |
Q3 Client wins
added value for client
Contract renewal, extending existing staffing and training services to outsourcing and perm solutions. 4-year contract, major French government institution.
Selected as primary supplier for staffing including tech staffing, under MSP model.
3-year contract, payment services leader, USA.
Upselling from Tech Staffing to Managed Services, global autos leader. Product & Systems development, Validation & Verification services.
• |
Omni-channel approach, leveraging |
• |
Strong processes, providing |
• |
branches and digital capabilities |
• |
visibility and accountability |
Superior onsite workforce analytics |
Depth and breadth of expertise |
- Technical expertise in vehicle engineering
- Strength of transformation solution, processes
Q3 2023 results |
4 |
Q3 23 financial overview
Revenues |
|
€5,958 mn |
+3% yoy |
Adj. EPS
€0.85 |
-6% yoy |
Gross profit
€1,242 mn |
+1% yoy |
20.8% margin |
(10) bps yoy |
Balance Sheet
Net debt / EBITDA |
2.9x |
EBITA excl. one-offs
€235 mn |
+14% yoy |
4.0% margin |
+40 bps yoy |
Cash Flow
Op FCF |
€282 mn |
+€172 mn yoy |
|
Cash conversion |
85% |
Q3 2023 results |
5 |
Adecco: strong execution
Revenues €4.6 bn, +4% yoy
Share of Group 78%
8% |
0% |
4% |
3% |
6% |
6% |
3% |
5% |
4% |
4,207 |
4,467 |
4,249 |
4,504 |
4,607 |
4,739 |
4,443 |
4,609 |
4,618 |
Q3 21 |
Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
Q1 23 |
Q2 23 |
Q3 23 |
Revenues (EUR mn) |
% yoy, organic, TDA |
|
EBITA €189 mn, 4.1% margin
5.4% |
5.2% |
|||||||
3.7% |
3.6% |
4.2% |
3.5% |
3.5% |
3.5% |
4.1% |
||
226 |
231 |
159 |
163 |
193 |
166 |
156 |
160 |
189 |
Q3 21 |
Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
Q1 23 |
Q2 23 |
Q3 23 |
EBITA, excl. one-offs (EUR mn) |
EBITA margin, excl. one-offs |
• Relative revenue growth +930 bps in Q3 |
• Flex +2%, Outsourcing +12%, Perm -2% |
organically |
• Autos, public sector, logistics strong. |
Manufacturing robust, IT Tech weak |
• Healthy gross margin: pricing firm, sector |
and solutions mix less favourable |
Strong growth in APAC, Southern Europe |
EBITA margin -10 bps yoy |
& EEMENA |
Current mix |
DACH solid, Americas robust |
Improved productivity |
Northern Europe, France soft |
G&A savings |
• |
EBITA margin supported by reduced |
SG&A, incl. G&A savings |
|
• |
Improved productivity: GP/Selling FTE |
+5% yoy; Selling FTEs -3% yoy |
Q3 2023 results |
6 |
Adecco: strong relative growth, market share gains in all regions
Revenues |
Market share |
||||||
By Segment |
Share |
Q3 23 |
Change, |
||||
of |
Q3 23 |
||||||
€ mn |
TDA yoy |
||||||
Group |
|||||||
France |
21% |
1,249 |
-2% |
||||
Northern Europe |
10% |
595 |
-1% |
||||
DACH |
7% |
434 |
+6% |
||||
Southern Europe |
18% |
1,079 |
+9% |
||||
& EEMENA (SEE) |
|||||||
Americas |
12% |
678 |
+1% |
||||
APAC |
10% |
583 |
+21% |
||||
Adecco |
78% |
4,618 |
+4% |
||||
EBITA and EBITA margin
excl. one-offs
Q3 23 |
Q3 23 |
Change, |
€ mn |
margin |
yoy bps |
62 |
5.0% |
+10 |
12 |
2.0% |
(130) |
18 |
4.2% |
(210) |
61 |
5.7% |
+10 |
9 |
1.4% |
+110 |
27 |
4.6% |
0 |
189 |
4.1% |
(10) |
- France: market subdued. Construction, healthcare, autos strong; IT tech, retail weak
- Northern Europe: UK&I +1%, Benelux 0%, Nordics -10%, due to regulatory change. Autos, public sector strong
- DACH: Germany +10%. Autos, logistics, prof. services strong. Sector mix, FTE investment weigh on margin
- SEE: Italy +7%, Iberia +11%, EEMENA +12%. Growth led by logistics, autos
- Americas: LatAm +23%, led by Argentina, Mexico. NAM -8%. US progressing in tough market; achieved profitability
- APAC: Japan +13%, India +19%, Asia +9%. Australia & New Zealand +73%, driven by significant new government contract
Q3 2023 results |
Quarterly revenue and EBITA excl. one-offs for 2022 are restated to reflect the transfer of part of AKKA US to Adecco US effective Jan 1, 2023 |
7 |
Please refer to the Appendix for further information |
Akkodis: margin uplift driven by agile cost management, synergy capture
Revenues €897 mn, -3% yoy
Share of Group 15%
14% |
14% |
14% |
14% |
8% |
12% |
|||
8% |
||||||||
6% |
4% |
|||||||
-1% |
||||||||
-3% |
||||||||
563 |
581 |
736 |
956 |
974 |
999 |
983 |
925 |
897 |
Q3 21 |
Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
Q1 23 |
Q2 23 |
Q3 23 |
Revenues (EUR mn) |
% yoy, organic, TDA |
Consulting |
North EMEA 0% yoy
South EMEA +8% yoy
North America (NAM) -16% yoy
APAC +4% yoy
EBITA €56 mn, 6.2% margin
• |
|||||||||
7.0% |
6.7% |
6.5% |
7.3% |
||||||
6.3% |
5.7% |
6.2% |
• |
||||||
4.9% |
5.2% |
||||||||
• |
|||||||||
36 |
40 |
50 |
62 |
56 |
73 |
48 |
48 |
56 |
|
Q3 21 |
Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
Q1 23 |
Q2 23 |
Q3 23 |
• |
EBITA, excl. one-offs (EUR mn) |
EBITA margin, excl. one-offs |
||||||||
EBITA margin +50 bps yoy |
• |
Good cost mitigation, synergies |
|
Lower volumes |
• |
Revenues impacted by tech downturn; staffing -19%, consulting +8%
EMEA solid: France strong +9%. Ongoing talent scarcity impacts Germany, +1%; strong comp weighs Data Respons, +2%
NAM weighed by sharp tech downturn. Consulting +24%. Strong cost mitigation, 55% recovery ratio1
Japan strong, +9%. Australia -7%, weighed by tech downturn
EBITA margin reflects agile cost management, strong synergy delivery
Secured ~€59 mn FY23 synergies (in EBITA terms) vs. €50-55 mn target
Q3 2023 results |
1 Calculation = yoy change in EBITA contribution / yoy change in Gross Profit contribution. Quarterly revenue and EBITA figures for 2021 are for Modis only. In 2022, AKKA was consolidated 24 Feb; quarterly |
revenue and EBITA figures include AKKA's contribution, while the organic growth rates yoy are for Modis only. In addition, quarterly revenue and EBITA excl. one-offs for 2022 have now been restated to reflect 8 |
|
the transfer of part of AKKA US to Adecco US effective Jan 1, 2023. Please refer to the Appendix for further information |
LHH: robust performance, continued strength in Career Transition
Revenues €443 mn, +2% yoy
Share of Group 7%
9% |
||||||||
4% |
1% |
3% |
0% |
1% |
0% |
0% |
2% |
|
449 |
447 |
461 |
477 |
462 |
472 |
466 |
465 |
443 |
Q3 21 |
Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
Q1 23 |
Q2 23 |
Q3 23 |
Revenues (EUR mn) |
% yoy, organic, TDA |
EBITA €35 mn, 8.0% margin
8.7% |
7.5% |
6.5% |
5.6% |
6.9% |
7.6% |
8.0% |
|
6.3% |
3.7% |
||||||
39 |
26 |
34 |
31 |
18 |
26 |
32 |
36 |
35 |
||||||||||||||||||||||||||||
Q3 21 |
Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
Q1 23 |
Q2 23 |
Q3 23 |
||||||||||||||||||||||||||||
EBITA, excl. one-offs (EUR mn) |
EBITA margin, excl. one-offs |
|||||||||||||||||||||||||||||||||||
• RS: markets subdued, particularly US, UK. |
Gross profit -22%, excl. US -14% |
• CT&M: excellent results, led by US. Strong |
new client wins world-wide, solid pipeline |
• L&D: Ezra +34%, pipeline strong. General |
Assembly, Talent Development challenged |
• Pontoon & Other: Tech downturn impacts, |
Hired challenged, Pontoon +4% |
Recruitment Solutions (RS) -18% yoy
Career Transition & Mobility (CT&M) +84% yoy Learning & Development (L&D) -21% yoy Pontoon & Other -1% yoy
EBITA margin +430 bps yoy
Favourable mix
Cost discipline
• |
Margin driven by segment mix, mainly |
CT&M, and cost management |
|
• |
Strengthening operational discipline in RS, |
protecting capacity to capture rebound |
Q3 2023 results |
9 |
Healthy gross margin; solid EBITA margin
Gross profit bridge
(As % of revenues yoy, in bps)
(10) |
0 |
(30) |
(70) |
+100 |
+10 |
(20) |
|
21.0% |
20.7% |
20.8% |
Q3 22 |
FX |
M&A |
Flex. |
Perm. |
Career |
Outs, |
Training, |
Q3 23 |
Placement |
Placement |
Transition |
Cons |
Up/Re- |
||||
& Other |
skilling |
Gross Profit (% yoy, organic) |
-1% |
-23% |
+89% |
+8% |
-19% |
As % of Group (approx.) |
55% |
10% |
10% |
20% |
5% |
EBITA bridge, excl. one-offs
(As % of revenues yoy, in bps)
(10) |
(10) |
+30 |
+40 |
(10) |
4.0%
3.6%
Q3 22 |
FX / |
Gross Sales |
G&A Other1 Q3 23 |
M&A |
Margin |
Profitability drivers
- GP / Selling FTE +6% yoy, Selling FTEs -5% yoy
- €24 mn G&A savings yoy
- SG&A 17.0% of revenues, -50 bps yoy
- SG&A -1% yoy vs. +2% in Q2, +7% in Q1
Q3 2023 results |
1 Other can include movements in depreciation, digital and IT expenses, one-time and/or special items and contribution from the FESCO JV |
10 |
Attachments
Disclaimer
Adecco Group AG published this content on 02 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2023 08:03:04 UTC.