Adecco's Profit Drops Less than Expected

Recruitment firm Adecco's fourth-quarter net profit fell 29 percent but the decline was less than analysts' expectations, and the Swiss-based staffing company said it sees good growth rates in Europe.

Demand remains weak in the U.S., while activity at the French branch will improve, company representatives said.

"If you look at the situation (in the U.S.) it's ok for the time being. It's weak but relatively stable," company CEO Dieter Scheiff told CNBC Europe. "Our business in Europe is still stable."

The group, whose net profit after it had benefited from a tax-break in the year-earlier period, is concentrating on improving profitability in France but has had to do so at the expense of market share.

Adecco expects its troubled French operation to improve by mid-2008 and return to a pace of growth in line with the overall market.

"France is a very attractive market for us," Scheiff said. "I'm very optimistic on what our management in France is doing."

Adecco's net profit for the period fell to 150 million euros, ahead of the average forecast of 145 million euros in a Reuters poll of 12 analysts and the group was upbeat about the outlook in the European and Asia staffing markets, but expects demand in the United States to remain weak.

Fourth-quarter revenue fell 1 percent to 1.7 billion euros in France, which accounts for around a third of Adecco's sales. The operating income margin improved by 40 basis points to 4.1 percent.

The market in France was growing between 1 percent and 2 percent, Scheiff told Reuters.

In North America, the market was stable, but it was difficult to predict how it would develop, Scheiff said. The group's revenue in the USA and Canada declined 6 percent in constant currencies to 752 million euros.

The staffing sector is closely linked to economic developments, with companies more likely to cut back on hiring in a downturn and Adecco's shares have come under pressure on concerns about a recession in the United States.

Adecco said it was still aiming for revenue growth of at least 7 percent to 9 percent per annum on average for the coming years and is on track to reach an EBITA margin of over 5 percent by 2009.

Adecco stock is trading at around 9 times expected 2009 earnings, at a slight discount to Manpower, but at a premium to Randstad, according to Reuters Estimates.

"We are looking for acquisitions and we are looking for acquisitions in the professional staffing area … and here we are concentrating on central Europe as well as in Asia," Scheiff told CNBC's "Squawk Box Europe".

© 2008 CNBC