Adecco Profit Climbs Thanks to Europe, Asia Staffing

The world's largest employment services group Adecco posted a 40 percent rise in third-quarter net profit on Friday, boosted by one-off gains and lower income taxes.

Net profit for the period rose to 230 million euros ($331.8 million), beating the average forecast of 186 million euros in a Reuters poll of 13 analysts. Underlying profit rose to 218 million euros from 164 million euros in the previous year.

Adecco said it had booked a gain of 12 million euros from the change in the calculation of French social security contributions and 28 million euros from lower income taxes.

"We continue to see solid growth rates in the European and Asian staffing markets, while demand in the United States remains weak ... we expect to continue to see growth rates below the market in France," the group said in a statement.

The group, which competes with Dutch groups Randstad and Vedior, said it would buy back shares worth up to 400 million euros by the end of 2008, which the group would use for future acquisitions.

Shares in Adecco have lost around a quarter of their value since mid-July on fears of a downturn in the United States after this summer's credit market turmoil.

The group confirmed its long-term goals of 7 to 9 percent annual revenue growth and an operating margin target of over 5 percent, but said it expected below-market growth in France, which accounts for around a third of its sales.

"Revenue development was disappointing, particularly in core markets France, U.S. and UK. Even in promising market Germany, organic revenue growth was slowing rapidly," said ING analyst Piethein Leune.

"This will be a worry for investors today. Positive for the shares is the share buy-back, which is coming earlier than we had anticipated," Leune said.

Adecco said it expected the U.S and Canada market, its second largest, to remain weak, but solid growth in Europe and good demand in Japan should continue.

Revenues increased 2 percent to 5.4 billion euros, below expectations. The group said its operating income margin improved 50 basis points to 5.1 percent.

Adecco stock is trading at 10.8 times expected 2008 earnings, at a slight premium to Vedior and Randstad, according to Reuters data.