Adecco posts modest revenue growth in the final quarter of 2021. Nevertheless, the group is optimistic about the future: The company wants to benefit from the shortage of skilled workers and the wave of layoffs in the industrialized countries.
According to Adecco, employees will have more bargaining power in the future. In the picture: Employees of the personnel service provider in the Zurich headquarters.
In the last quarter of 2021, the personnel service provider Adecco is almost back to the time before the pandemic with an increase in sales of 1.6 percent to 5.5 billion euros. At the end of 2019, Addeco’s turnover was 5.96 billion euros. The group can also increase its profitability. Gross margin increased 1.1 points to 20.7 percent in the fourth quarter.
However, these results were not enough for investors. By the afternoon, the share price had fallen by more than 6 percent to 42.85 francs. Since last year, the securities have lost 28 percent in value. Only the constant dividend of CHF 2.50 per share can console investors about the massive price drop. Today’s price drop should not be overestimated given the generally negative market environment. Addeco’s chief financial officer Coram Williams admits that some investors were also expecting higher sales figures.
It is understandable that the markets are not satisfied with the moderate growth. Because a look at the competition from the Swiss company shows that Adecco grew below average at the end of 2021. The Dutch market leader Randstad was able to increase its turnover by 16 percent in the fourth quarter, the American personnel service provider Manpower increased by 6 percent.
Adecco is nevertheless optimistic about the future: the recruitment agency should benefit from the post-pandemic upheavals on the labor market.
«Great Resignation» characterizes the job market
In the wake of the pandemic, an increased number of workers have turned their backs on the labor market. This development is known as the “Great Resignation”, a large wave of layoffs. In the USA in particular, the termination rate – i.e. the number of terminations as a percentage of employment – shot up to a record high of around 3 percent at the end of last year. This trend continued in 2022: On average, 4 million Americans resign each month.
“Initially, significantly lower participation rates in the labor market were evident, especially in the USA. But now we’re realizing that we’re dealing with a global trend,” says Adecco’s chief financial officer, Coram Williams. Workers are also more willing to change jobs than they were before the pandemic, Adecco surveys have shown.
Most so-called “white collar” jobs can nowadays be carried out independently of location. Well-trained employees can therefore afford to be more selective. The acute shortage of skilled workers is thus becoming increasingly structural. Adecco currently sees a shortage of well-trained workers in all markets, says Williams.
At the same time, companies are creating more jobs again after the end of many corona measures. On the labor market, a shortage of supply meets increased demand.
Good times for personnel service providers
Adecco therefore sees good times ahead. First, the demand for labor also increases the demand for staffing services. At the same time, Chief Financial Officer Williams assumes that wages will rise on average. Since Adecco’s pricing is based on wage levels, rising salaries would be good news for the company.
Increased earnings could also benefit Adecco’s executives. At the beginning of the pandemic, management waived 15 percent of their wages for six months due to the corona crisis, CEO Alain Dehaze waived 20 percent. The chief financial officer left unanswered the question of whether Williams himself was expecting a salary increase in the near future.