FY 2013 FINANCIAL PERFORMANCE
Revenues
Group revenues for 2013 were EUR 19.5 billion, down 5% or down 1% organically compared to the prior year. Currency fluctuations had a negative impact on revenues of approximately 3%. Permanent placement revenues amounted to EUR 320 million, a decrease of 3% in constant currency. Revenues from the counter-cyclical Career Transition (outplacement) business totalled EUR 279 million, an increase of 7% in constant currency.
Gross Profit
In 2013, gross profit was EUR 3.6 billion, a decrease of 3% compared to 2012. Organically, gross profit increased by 1%. The gross margin increased by 40 bps to 18.3%, driven by our continued strict approach to pricing as well as the effect of the French CICE (tax credit for competitiveness and employment).
Selling, General and Administrative Expenses (SG&A)
SG&A decreased by 7% or by 3% organically. Excluding restructuring and integration costs, SG&A in 2013 decreased by 1% organically. SG&A in 2013 included restructuring costs of EUR 33 million, incurred in France (EUR 19 million), various other European countries (EUR 6 million), North America (EUR 6 million) and LHH (EUR 2 million). SG&A in 2012 included restructuring costs of EUR 83 million and integration costs of EUR 5 million. In 2013, FTE employees were down 5% and branches declined by 6%. At year end 2013, the Adecco Group had over 31,000 FTE employees worldwide and a network of around 5,100 branches.
EBITA
In 2013, EBITA was EUR 821 million and the EBITA margin was 4.2%. EBITA excluding restructuring costs was EUR 854 million, and the margin was 4.4%, up 40 bps when compared to the EBITA margin excluding restructuring and integration costs in 2012.
Amortisation of Intangible Assets
Amortisation was EUR 42 million in 2013, compared to EUR 52 million in 2012.
Operating Income
Operating income in 2013 was EUR 779 million, compared to EUR 673 million in 2012.
Interest Expense and Other Income / (Expenses), net
Interest expense increased by EUR 3 million to EUR 79 million in 2013. Other income / (expenses), net was an expense of EUR 2 million in 2013, compared to a net expense of EUR 13 million in 2012. The 2012 expense included EUR 15 million loss on the sale of a business in North America.
Provision for Income Taxes
The effective tax rate for 2013 was 20% compared to 35% in 2012. In 2013, discrete events had a positive impact of approximately 8% on the tax rate. In 2012, discrete events including the valuation allowance on the French deferred tax assets had a negative impact of approximately 4% on the tax rate.
Net Income Attributable to Adecco Shareholders and EPS
In 2013, net income attributable to Adecco shareholders was up 48% to EUR 557 million. Basic EPS was EUR 3.09, up 54% compared to 2012, reflecting net income growth and the impact of the share buyback programmes.
Cash-flow, Net Deb t4 and DSO
Cash flow generated from operating activities amounted to EUR 520 million in 2013. The Group invested EUR 81 million in capex in 2013. Dividends paid were EUR 266 million and the Group paid EUR 297 million for treasury shares. Net debt at the end of December 2013 was EUR 1,096 million compared to EUR 972 million at year end 2012. In 2013, DSO was 54 days, the same as in 2012.
Q4 2013 FINANCIAL PERFORMANCE
Revenues
Q4 2013 revenues of EUR 5.0 billion were down 1% year-on-year, or up 4% in constant currency. Currency fluctuations had a negative impact on revenues of approximately 5%. Permanent placement revenues amounted to EUR 74 million, up 3% in constant currency. Revenues from counter-cyclical Career Transition (outplacement) totalled EUR 71 million, up 10% in constant currency.
Gross Profit
Gross profit amounted to EUR 913 million and the gross margin was 18.3%, up 50 bps year-on-year. Temporary staffing had a 40 bps positive impact on the gross margin and the outplacement business added a further 10 bps. Permanent placement and other activities had a neutral effect.
Selling, General and Administrative Expenses (SG&A)
SG&A was EUR 692 million, a 7% decrease compared to Q4 2012. Restructuring costs were EUR 17 million, compared to EUR 46 million in Q4 2012. SG&A excluding restructuring costs was up 1% in constant currency. Sequentially, SG&A excluding restructuring costs was up 3% in constant currency, partly due to seasonality. FTE employees decreased by 3% (-900) and the branch network decreased by 7% (-370 branches), compared to Q4 2012.
EBITA
EBITA was EUR 221 million. EBITA excluding restructuring costs was EUR 238 million, up 30% in constant currency compared to the prior year. The EBITA margin excluding restructuring costs was 4.8%, up 90 bps compared to 3.9% in Q4 2012.
Amortisation of Intangible Assets
Amortisation of intangible assets was EUR 11 million compared to EUR 12 million in Q4 2012.
Operating Income
Operating income was EUR 210 million compared to EUR 136 million last year.
Interest Expense and Other Income / (Expenses), net
Interest expense was EUR 21 million compared to EUR 20 million in Q4 2012. Other income / (expenses) net, was an expense of EUR 1 million in Q4 2013, the same as last year.
Provision for Income Taxes
The effective tax rate was 7%, compared to 70% in the prior year. In Q4 2013, the tax rate was positively impacted by discrete events, including the settlement of contingencies and the expiration of statute of limitations in several jurisdictions. In Q4 2012, the tax rate was negatively impacted by discrete events, including the valuation allowance on the French deferred tax assets.
Net Income attributable to Adecco shareholders and EPS
Net income attributable to Adecco shareholders was EUR 174 million, compared to EUR 35 million last year. Basic EPS increased to EUR 0.98 from EUR 0.19.