Adecco shares are trading lower Tuesday after the world’s largest staffing business reported first-quarter earnings that were below expectations.
However, the company also said there were signs of improvement in the UK’s permanent placements market as firms begin making firmer plans for the future despite the uncertain Brexit backdrop.
By 1135 BST, Adecco shares were 5.43% lower at CHF63.78. The stock has been heading generally lower since the beginning of 2018.
Adecco Q1 earnings details
Adecco’s Q1 earnings report shows that revenues in the first three months of 2018 grew 6%, a slightly slower rate than the 7% revenue increase in the fourth quarter of 2017.
Net income was disappointing at €130 billion, below estimates of around €149 billion. Adecco’s EBITDA was also below the Q4 performance at growth of 3.8%.
The group states, however, that earnings will improve from Q2 onwards as the effect from previous investments fades and the Bank Holidays also become a positive factor.
“Over the last 12 months, significant progress has been made in the strategic development of the Group,” said Adecco’s CEO, Alain Dehaze.
“The EBITA margin was negatively impacted by several non-underlying factors and ongoing investments in our strategic initiatives. These effects will reduce during the remainder of 2018,” Dehaze added.
Regional employment trends
Adecco also reported details on its regional operations.
In the UK, demand from businesses for permanent placements improved as firms make firm decisions despite the ongoing uncertainty of the future impact of Brexit.
Dehaze said in a Reuters interview that although European firms have reduced their UK staffing levels by 11%, there has been a minor improvement in the quarter-to-quarter figures, suggesting the bottom of that position has been and gone.
“At some point companies have to hire again. You cannot freeze activities indefinitely,” Dehaze said.
Elsewhere, high sickness levels across Europe hurt revenues during the first three months of the year, while strike action n Germany had a negative impact too.
But, looking forward, Dehaze is expecting an improved financial performance for the global staffing firm.