Annual Report 2013

Review of Group results

Key figures at a glance

Download xls sheet

in EUR millions (except per share information)

2013

2012

variance

 

 

 

 

Revenues

19,503

20,536

-5%

Gross profit

3,560

3,674

-3%

Gross margin

18.3%

17.9%

 

SG&A

(2,739)

(2,949)

-7%

EBITA

821

725

13%

EBITA margin

4.2%

3.5%

 

Net income attributable to Adecco shareholders

557

377

48%

Basic EPS in EUR

3.09

2.00

54%

Diluted EPS in EUR

3.08

2.00

54%

Operating cash flow

520

579

-10%

Dividend per share in CHF

2.00 [1]

1.80

11%


2013 BEGAN WITH UNCERTAINTY AND ENDED WITH SIGNS OF ECONOMIC RECOVERY. REVENUE TRENDS IMPROVED FOR THE ADECCO GROUP AND WE INCREASED OUR EBITA MARGIN EXCLUDING RESTRUCTURING AND INTEGRATION COSTS.

Group performance highlights 2013

A return to revenue growth in Q4 2013 The economic situation entering 2013 was marked by continued uncertainty over the European debt crisis and the looming fiscal cliff in the USA. However, during Q1 2013 signs of stability became visible and overall macroeconomic conditions improved modestly as the year progressed. We saw a similar gradual development in our own business, with year-on-year organic [2] revenue growth moving from -7% in Q1 2013 to 4% in Q4 2013. This improvement was largely driven by regions where our business has a high exposure to industrial demand, such as France, Germany & Austria, Iberia, Italy and Benelux. Our growth in the latter two regions was especially encouraging as we significantly outperformed the market, especially in the second half of the year. We also grew faster than our major peers in North America, where we saw steady revenue growth during 2013, and in our global business LHH.

Increased EBITA margin Our EBITA margin excluding restructuring costs increased to 4.4% in 2013, up 40 bps compared to the 4.0% EBITA margin excluding restructuring and integration costs in 2012. Gross margin was the primary driver, increasing from 17.9% in 2012 to 18.3% in 2013. This was the result of our continued strict approach to pricing as well as the effect of the French CICE (tax credit for competitiveness and employment). In addition, we maintained our tight cost control and aligned the cost base where necessary: we took additional cost reduction measures in France and combined data centres in North America. Overall, SG&A excluding restructuring and integration costs fell by 1% organically compared to the prior year, mirroring the organic revenue decline.

Dividends and share buyback programmes Strong cash generation is a key focus throughout the Company, underpinned by our use of EVA in managing the business. In May 2013, we paid the dividend for 2012 of CHF 1.80 per share, amounting to a total of EUR 266 million. For 2013, the proposed dividend is CHF 2.00 [1] per share, an increase of 11%. This will amount to an estimated payout of EUR 290 [3] million in May 2014. In addition we continued our share buyback programmes. In September 2013 we completed a EUR 400 million share buyback programme (commenced in July 2012), and launched a further share buyback programme of up to EUR 250 million.

Main financial highlights 2013

  • Revenues of EUR 19.5 billion, down 5% year-on-year (-1% organically)
  • Strong gross margin increase to 18.3%, up 40 bps year-on-year
  • SG&A down 1% year-on-year, organically and excluding EUR 33 million restructuring costs in 2013 and EUR 88 million restructuring and integration costs in 2012
  • EBITA excluding restructuring costs of EUR 854 million, up 9% in constant currency compared to EBITA excluding restructuring and integration costs of EUR 813 million in 2012
  • EBITA margin excluding restructuring costs of 4.4%, up 40 bps compared to EBITA margin excluding restructuring and integration costs of 4.0% in 2012
  • Net income attributable to Adecco shareholders of EUR 557 million
  • Proposed 2013 dividend of CHF 2.00 per share, up 11% compared to last year

Other highlights

  • In July 2013, the Adecco Group successfully issued EUR 400 million medium-term 6-year notes with a coupon of 2.75%. The proceeds will be used for the refinancing of the existing 5-year guaranteed Euro medium-term notes due on April 28, 2014 and for general corporate purposes.
  • In September 2013, the Adecco Group completed the share buyback programme of EUR 400 million. The company acquired 9,721,446 shares on a second trading line with the aim of subsequently cancelling the shares and reducing share capital. Immediately after completion the Company started a new share buyback programme of up to EUR 250 million and as of December 31, 2013 had acquired 460,250 shares for EUR 25 million under the new programme. Shareholders will be asked to vote on the cancellation of the shares acquired until December 31, 2013 (10,181,696 shares) at the AGM 2014.
  • In November 2013, the Adecco Group announced the appointment of Mark De Smedt as Chief Human Resources Officer of the Group and member of the Executive Committee effective as of January 1, 2014.

[1]Proposed by the Board of Directors subject to approval at the 2014 AGM.

[2]Organic growth is a non-U.S. GAAP measure and excludes the impact of currency and acquisitions and divestitures.

[3]Based on the total number of outstanding shares of 178,138,000 (excluding treasury shares).