Annual Report 2014

Our target & priorities

We aim to reach an EBITA margin of above 5.5% in 2015 – a new peak for Adecco. The target level was initially set at the beginning of 2010, after our share of the higher-margin Professional Staffing business increased to above 20% of total revenues. In 2014, the EBITA margin excluding restructuring costs was 4.8%, up 40 bps compared with 2013. The slow recovery in Europe and the accelerating growth in North America helped revenues to increase 4% in constant currency compared to 2013. Gross profit increased by 5% in constant currency and gross margin improved by a further 20 bps to 18.5% driven by price discipline, a better business and country mix, and the positive impact from the increase in the rate of French CICE (tax credit for competitiveness and employment). SG&A excluding restructuring costs increased by 3% in constant currency, below the rate of revenue growth. Along with the higher gross margin, this operating leverage also contributed to the improved EBITA margin excluding restructuring costs in 2014 compared to 2013.

We continue to be very focused on reaching our EBITA margin target of above 5.5% in 2015. Economic growth slowed in the second half of 2014, but a pick-up of GDP growth is expected for 2015 and the start of the year suggests this is already beginning to happen. Given this outlook and based on the good progress on our six strategic priorities and our continued price and cost discipline, we remain convinced we will achieve our target.

The strategic focus of the Adecco Group’s management is on Engagement, Information Technology (IT), Professional Staffing & Services, Segmentation, Business Process Outsourcing solutions, and the Emerging Markets.

  • Engagement: attracting, developing, and retaining our employees is essential to building successful long-term relationships with both clients and associates. A better, longer-lasting relationship with our clients and associates protects our business and is a competitive advantage both from a revenue and from a cost perspective. The regularly conducted Great Place to Work® survey on the job satisfaction of our own employees gives insight into how we can continuously improve our working environment.
  • Information Technology: an important strategic priority for the Adecco Group is the better use of IT to maximise business opportunities and to improve efficiency. In 2012 we began a project to move from a collection of local IT functions to a global IT organisation with a common platform in all countries. This project with its various workstreams – including Candidate Management, Client Management, Search & Match, and Business Intelligence – will help us to give a unique experience to candidates, associates, clients and colleagues. Our investments in IT are aimed at enhancing our cost leadership position, but also at maximising our revenue-generation opportunities, such as by using Big Data to predict the future demands of our customers and to model the effectiveness of our own commercial actions. Major milestones in 2014 were the successful small-scale implementations of the applications we have developed over the last two years, and the beginning of our first major roll-out in Japan.
  • Professional Staffing & Services: Adecco is the global leader in professional staffing worldwide. It remains an essential part of the Group’s strategy to increase the share of revenues generated from Professional Staffing. This segment, with higher growth and margin potential, accounts for approximately 30% [1] of the global staffing market but only 23% of Adecco revenues. In professional staffing, where penetration rates are still significantly lower than in general staffing, growth will be driven by scarcity of talent, evolving working practices, and higher wage inflation for qualified personnel. We will also benefit from the roll-out over the last few years of our key Professional Staffing brands in our major markets. We have also launched several initiatives to expand our Permanent Placement business, which are starting to pay off. In 2014, Permanent Placement grew in constant currency by 5% in Q1 and by 14% in Q4. We are also the global leader in career transition and talent development through our Lee Hecht Harrison (LHH) business. The counter-cyclical nature of career transition is a good hedge during economically difficult times, as this business peaks during recessions. Our large scale and flexible approach to cost management enables LHH to achieve double-digit EBITA margins throughout the cycle.
  • Segmentation: optimising the segmentation of our client base allows us to capture additional market and margin opportunities as we target to increase business with small and medium-sized clients. In 2015 we will continue to roll out specific operating models for different client segments into further countries.
  • Business Process Outsourcing solutions: Adecco considers the continuing trend towards Business Process Outsourcing (BPO) solutions, including Managed Service Programmes (MSP), Recruitment Process Outsourcing (RPO), and Vendor Management System (VMS) a major opportunity to differentiate our service offering. Large multinational clients increasingly seek to outsource their HR processes. With a global footprint and extensive know-how of local labour markets, Adecco is ideally positioned to take advantage of this trend. Our comprehensive Solutions offering is market-leading and a key competitive advantage. In 2014, we further enhanced our BPO offering with the acquisition of OnForce. OnForce’s Freelancer Management System (FMS) provides cloud-based solutions for companies to manage their use of freelancers/independent contractors. These solutions complement the Vendor Management System (VMS) provided by Adecco’s Beeline business. The merger of these two offerings creates a unique integrated solution for companies to source talent through multiple channels.
  • Emerging Markets: the emerging markets offer immense untapped growth potential for the staffing industry. Penetration rates of temporary staffing services are still at very low levels. The highly dynamic economic activity, the shift of production, and growing investments in the emerging markets by multinational corporations are the main growth drivers for our business in these markets.


[1]Adecco estimate