Transcription
January 2019The Adecco GroupBaader Helvea conference, Jan 20191
ContentsContents–––––The Adecco GroupThe Adecco Group At A GlanceOur Investment StoryQ3 2018 resultsPerformance HistoryOther InformationBaader Helvea conference, Jan 20192
The Adecco GroupBaader Helvea conference, Jan 20193
The Adecco Group: one company, many strengths2017 figuresOUR SERVICE LINESOUR BUSINESS SITIONMSP & RPOTALENTDEVELOPMENTGeneral StaffingContribution to Group revenues76%Office 24%OUTSOURCINGIndustrial 52%Revenue (%)88 2 269118812Professional StaffingGross profit (%)Contribution to Group revenues21%OUR GEOGRAPHIESFigures refer to % of Group revenuesNorthAmerica(19%)InformationTechnology 10%Finance &Legal 4%Engineering& Technical 5%Medical &Science 2%Rest ofthe World(17%)Europe(62%)LHH(2%)EUROPEFranceUK & IrelandGermany, Austria, SwitzerlandBenelux and NordicsItalyIberiaThe Adecco GroupSolutions23%9%9%9%8%4%REST OF THE WORLDJapanLatin AmericaEastern Europe and MENAAsiaAustralia & New ZealandIndiaContribution to Group revenues3%5%4%3%2%2%1%Career Transition & Talent Development 2%Business Process Outsourcing 1%All figures FY 2017Baader Helvea conference, Jan 20194
Delivering progress: 5-year track 54.84.4416641517414171615141514131413-113Dividend per share (CHF)Cash conversion (%)105EBITA marginexcluding one-offs (%)2.40Organic revenue growth (%)* TDANet debt to EBITDAexcluding 8.3Days sales outstanding171615141314131716151413World Ranking17World Ranking16Europe Ranking18.52nd7th5thEurope Ranking1513thEurope Ranking14The Adecco GroupGross margin (%)15Great Place To WorkTM rankingBaader Helvea conference, Jan 20195
The Adecco GroupBaader Helvea conference, Jan 20196
Our investment storyHigher value,lower costs and lesscapital will driveshareholder returnsThe Adecco Groupis taking the lead inthis transformationGlobal megatrendsare changing theworld of workWe are reshaping the worldof work, reinventingexisting ways of operating,and developing andacquiring new capabilities.Employees will work when,where and how they wish,doing the work thatmatches their skills,interests and compensationneeds.We provide innovativesolutions that enableemployers to flexiblymanage their workforcesand employees toflexibly managetheir careers.Employers will hire workersto meet carefully definedneeds, through a broadrange of relationshipsacross all skill levels.The Adecco GroupNew employmentmodels bring excitinggrowth opportunitiesWe are the largest providerof workforce solutions, yetwe have less than a 2%share of the totaladdressable market forflexible and permanent HRsolutions.Strengthening andexpanding our serviceofferings will allow us togrow our market share.Digital investments raisebarrier-to-entry andincrease economies ofscale.By combining data, technologyand talent, we increase ourvalue to clients and candidatesand strengthen our competitiveposition.Digitising our processesreduces our cost-to-serve,and improves our capitalefficiency. This will helpus to expand ouroperating marginand generatestrong cash flow.Baader Helvea conference, Jan 20197
Megatrends are reshaping the world of workThe Adecco GroupGeopolitical & economicuncertaintyAutomation, AI &Organisations recognisethat flexibility and agilityare the key to prosperingin an uncertain and fastchanging world. Having theright skills ‘on-demand’ isbecoming the new normal.Combining automation withflexible HR solutions willdrive a step change inproductivity, for our clientsand for the Adecco Group.New distribution channelsand data-driven businessmodels are emerging asHR solutions go digital.The ‘gig’ economyNew demographic mixSkills imbalancesPeople are choosing towork ‘gigs’ – performingshorter tasks or services –instead of traditional fulltime jobs. Online platformsare helping to efficientlymatch supply and demand.Populations are ageing andthe workforce is shrinkingin many countries, leadingto talent shortages.Individuals are choosingto work in ‘retirement’,often flexibly. Millennialsare digital-natives andexpect different thingsfrom their careers.New jobs require newskills, which remain in shortsupply. A new approach toeducation, and especiallyup-skilling and re-skilling,must be embraced if theeconomy and society areto prosper.machine learningDigitisation, bigdata & analyticsBaader Helvea conference, Jan 20198
Digital and rising complexity will encourage consolidation ofthe highly fragmented industryThe Adecco Group5%The Adecco Group is the globalmarket leader with only 5% marketshareGlobal peer 15%Global peer 24%Smaller global &large regional peers11% 460billionRemainder of themarket75%The Group’s digital evolution: raises barriers-to-entry increases economies of scale allows access to newmarkets/segments creates opportunities todifferentiateSource: the Adecco Group. Includes temporary staffing, permanent recruitment, career transition and talent developmentThe Adecco GroupBaader Helvea conference, Jan 20199
The Adecco Group is strongly positioned to expand its leadershipOur competitive strengthsSome competitorsFew competitorsOur unique assetsKnowledge of complexlabour regulationsGlobal distribution( 100,000 clients)Largest scope of end-to-endHR solutions (incl. up/reskilling)Ability to manage largecontingent workforcesRich workforcedata assetsGrowTogether – a fundamentalupgrade of our core capabilitiesStrong brandportfolioTrusted on compliance& data securityMost comprehensive portfolioof digital HR platformsThe Adecco GroupBaader Helvea conference, Jan 201910
A complete 360 HR solutions offeringSupporting candidates and companies at every stage of the work lifecycleGross profit (Full(Full-year 2017) General Staffing (Temp)52%offeringProfessional Staffing(Temp)18%Permanent Placement11% Career Transition, TalentDevelopment, Up/reskilling10%The Adecco GroupLeading uniquepositions incareer transition and360Oup/reskillingOutsourcing6%MSP & RPO3%Broadest solutions Elevating clientdiscussionsto the C-suite.Stickier relationshipsBaader Helvea conference, Jan 201911
Clear strategic agenda for the Adecco GroupPerformOperating discipline,strong cash flow generation,and progressive dividendSegmentation,Pricing, ‘PERFORM’TransformAdapting our core business todifferentiate and take profitablemarket shareGrowTogetherInnovateCapturing new growthopportunities, leveragingthe megatrendsNew VenturesThe Adecco GroupBaader Helvea conference, Jan 201912
Investing in GrowTogether & New Ventures to drive growth and marginGrowTogetherNew VenturesRevenuesProfitable market share gainsMarket expansion to ‘new frontiers’MarginsEfficiency savings starting 2018,growing to EUR 250m p.a. in 2020Higher-margin new businessesInvestmentEUR 245m totalprogramme costs 2017-20Accelerating digital ventures 2018-19;c.25bps p.a. EBITA margin impactApproximately EUR 200m totalrestructuring costs 2018-19Capital expenditure EUR 10-20m p.a.and selective external investmentsThe Adecco GroupBaader Helvea conference, Jan 201913
GrowTogether: digitisation and automation drive performanceMiddle- ecruitingEfficiencyTimesheet DigitisationClient PortalCandidate PortalProcurement SystemMarket InsightsChatbotsE-DocumentsDocuments andAdmin AutomationBranch DashboardPooling / PlanningautomationThe Adecco GroupBaader Helvea conference, Jan 201914
New Ventures: a clear digital strategy - online platforms and skillsdevelopmentDigital SkillsDigital PlatformsStaffingFreelanceCo-createdwith InfosysCo-createdwith MicrosoftPermanent RecruitmentUpskilling and ReskillingOther Partnerships and InvestmentsThe Adecco GroupBaader Helvea conference, Jan 201915
Delivering attractive shareholder returns while investing for the futureInvest in profitable growthCommitted to investmentgrade credit ratingMaintain progressive dividend policywith payout of 40-50% andDPS at least in-line with prior yearExploit buy-and-buildM&A opportunitiesThe Adecco GroupReturn excess cashto shareholdersBaader Helvea conference, Jan 201916
Strong balance sheet and sustainable dividendNet Debt/EBITDA to decline by year-end1.4x1.3x1.2xDividend sustainable under stress1,2002006-08 structural improvement inworking capital1,0001.1x8000.9x0.8x0.8x 0.8x0.7x600Dividend for 2017:EUR 350 M40020002006 2007 20082009 2010 2011 2012 2013 2014 2015 2016 2017Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec18F Net Debt expected to decline by year-end2018; seasonally higher H2 cash flow andproceeds from sale of Beeline stakeFree Cash Flow Working Capital absorbs/releases cashcountercyclically when compared to EBITA2017 dividend would have been covered byFree Cash Flow even in 2009-10Note: Net Debt to EBITDA excludes one-offsThe Adecco GroupBaader Helvea conference, Jan 201917
“Buy-and-build” acquisition strategy“Buy-and-build” acquisition strategymeans that with any acquisition The Adecco Group1We accelerate our strategic development, broadeningand diversifying our offering2We are a ‘better owner’ of the business, achieving revenueand/or cost synergies with our existing activities3We create value for our shareholders delivering positiveEVA within 3 yearsBaader Helvea conference, Jan 201918
More growth, stronger margin, progressive dividend Market share gains Expansion into‘new frontiers’ RevenuegrowthTrue structuralgrowth High cash conversion Self-funded investments todrive growth and marginThe Adecco GroupEBITAmarginLeadingTSRCashflow Value-addedservices Efficient deliverymodels Higher marginbusinesses Progressive dividend policy Value-enhancing M&Aand/or capital returnsBaader Helvea conference, Jan 201919
Our commitmentDeliver leading Total Shareholder ReturnDrive revenue growthStrengthen marginDeliver strong cash flowOurcommitmentsAccelerate structuralorganic revenue growthDrive sustained EBITAmargin improvementMaintain a progressivedividend policyBy 2020Increase GDP multiplier(from 3x to 4x)EUR 250m p.a.productivity savings(100bps of revenue)Achieve continued strongFCF after investmentsProofpointsProfitable share gainsExpanding to ‘newfrontiers’Productivityimprovements Digitalventures mix benefitValue-enhancing M&Aand/or capital returnsThe Adecco GroupBaader Helvea conference, Jan 201920
Our path to 2020: investments to drive sustainable margin improvementInvestments/savings in EURmGT efficiency savingsGT programme costsGrowTogether net w ventures(10)(60)(65)Combined investment/savingsIncremental YoY (EURm)(60)(60)(75)(15)(25) bps(5) bpsIncremental YoY margin impact 525 bps75 bps25 bps Total GrowTogether programme costs EUR 245 million (2017-2020) GrowTogether efficiency savings ramp-up through 2019, with net positivecontribution New Ventures investments continue to be a net drag in 2019The Adecco GroupBaader Helvea conference, Jan 201921
Q3 2018 results6 November 2018The Adecco GroupBaader Helvea conference, Jan 201922
Moderation in organic revenue growth in Q3, driven by EuropeGroup revenue growthSegment revenue growthOrganic revenue growth,trading days adjustedOrganic revenue growth, TDA (%)109877%656%6%6%44%322%10Q2Q32017Q4Q1Q2Q32018Q3 2018vs marketFranceNA, UK&I General StaffingNA, UK&I Professional StaffingGermany, Austria, SwitzerlandBenelux and NordicsItalyJapanIberiaRest of WorldCareer Transition & Talent Dev.5%0%-2%-2%-3%6%4%0%7%-4% NA / UK&INA / UK&IG&A - / CHBEN - / NOR Adecco Group2% above market, in-line with market, – below marketoGrowth slowed to 2% organically and tradingdays adjusted, driven by EuropeoMost European markets softened in Q3, aseconomic growth moderatedoRevenues in September and October combinedup 1%, TDAoOutperformance in France, Switzerland, Nordicsand Career TransitionoUnderperformance in Germany and BeneluxThe Adecco GroupBaader Helvea conference, Jan 201923
Underlying improvement partially offsetting EBITA margin headwindsGroup EBITA margin YoYSegment EBITA margins YoYEBITA marginexcluding oneone- offsQ3 20185.4%5.4%(15) bps(15)bps(30) bpsbps(30)(20)bpsbps(20)Q3 2017excl. one-offsCICE reductionStrategicinvestmentsGerman Integrationbps2525 bpsUnderlyingimprovement5.0%5.0%5.0%Q3 2018excl. one-offsVarianceFranceNA, UK&I General StaffingNA, UK&I Professional StaffingGermany, Austria, SwitzerlandBenelux & NordicsItalyJapanIberiaRest of WorldCareer Transition & Talent Dev.6.5%3.6%5.4%4.8%3.6%8.6%7.0%4.9%4.0%14.7%(30) bps30 bps0 bps(210) bps(100) bps40 bps60 bps(50) bps30 bps(1,120) bpsAdecco Group5.0%(40) bpsoEBITA margin excluding one-offs -40 bps YoYooCICE reduction (-15 bps), strategic investments(-30 bps), Germany integration (-20 bps)France positive product mix and productivity partlyoffsets CICE (-60 bps) and strategic investmentsoGrowTogether productivity savings starting toboost underlying profitabilityIberia and Benelux & Nordics: timing differencesbetween revenue slowdown and cost actionsoCTTD includes consolidation of General AssemblyoThe Adecco GroupBaader Helvea conference, Jan 201924
Organic gross margin trend similar to icTemporary staffingPermanent placementCareer TransitionOtherSG&A productivityQ2 2018015(15)0(15)20(15)10Q3 201820300(10)(30)30(10)043%3Organic YoY change (%)Gross margin &A excl.FTEone-offs employeesoQ3 2018 gross margin up 20 bps; GeneralAssembly and Vettery improving the mixoFull-time equivalent (FTE) employees up 1%organicallyoOrganic gross margin -10 bpsooTemp staffing gross margin -30 bps driven byCICE reduction (-15 bps) and price/mix (-15 bps)SG&A 3% organically, of which approximately 1%related to strategic initiatives (N.B. the majorityof incremental strategic investments is in M&A)The Adecco GroupBaader Helvea conference, Jan 201925
Strong balance sheet and cash flowCash conversionNet debtoCash flows from operations of EUR 165 million inQ3 2018, compared to EUR 188 million in Q3 2017oNet debt EUR 1,239 million at end of September2018, vs. EUR 1,576 million at end of June 2018oFor Q3 2018, cash conversion was 78% for the lastfour quarters, compared to 80% in FY 2017ooDSO 54 days in Q3 2018 up from 53 days in Q2 2018and in Q3 2017Net debt to EBITDA excl. one-offs 1.1x at 30September 2018 vs 1.4x at 30 June 2018, and 0.8x at30 September 2017oShare buy back in progress (EUR 150 million)Net debt in EUR millions1,5760.8x1,072Q3 20171.1x1,2391,143994Q4 2017Q1 2018Q2 2018Q3 2018 net debt to EBITDA excluding one-offsThe Adecco GroupBaader Helvea conference, Jan 201926
Concluding messages of Q3 2018Performo Solid performance despite slower market growtho Good underlying profitability - cost adjustments to protect our marginTransformo GrowTogether scaling up and delivering resultso Will deliver first EUR 50 million savings in 2018, while establishing truedifferentiation to drive growthInnovateo General Assembly and Vettery driving exciting innovation in our industryThe Adecco GroupBaader Helvea conference, Jan 201927
Outlooko Revenue growth in September and October combined was 1%, organically andtrading days adjustedo In France, the transition from CICE to new social charge reductions will meanno subsidies are paid for December. One-time negative impact on Group grossmargin of approx. 25 bps in Q4 2018, in addition to the continuing impact of thereduction of CICE from 7% to 6%o The Group will deliver the targeted EUR 50 million GrowTogether productivitysavings in 2018The Adecco GroupBaader Helvea conference, Jan 201928
The Adecco GroupBaader Helvea conference, Jan 201929
Revenues by segment, 2016-17Revenues EUR millionsChange %% of revenues20172016EURConstantcurrencyOrganicOrganic, TDA120172016France5,3504,9478%8%8%9%23%22%N. America, UK & I. General Staffing3,0173,079-2%1%1%2%13%13%N. America, UK & I. Prof. 97911%11%11%11%4%4%Rest of %23,66022,7084%6%6%6%100%100%Germany, Austria, SwitzerlandBenelux and NordicsLee Hecht HarrisonAdecco Group1 TDA trading days adjustedThe Adecco GroupBaader Helvea conference, Jan 201930
EBITA excluding one-offs by segment, 2016-17EBITA excluding oneone-offsVariance %EBITA margin excluding oneone-offsVariance bpsEUR 423217%7%6.4%6.5%(10) bps95116-17%-15%3.2%3.8%(60) bps210219-5%-2%5.8%5.8%0 bpsGermany, Austria, Switzerland95114-16%-16%4.3%5.2%(90) bpsBenelux and Nordics7273-2%-1%3.5%3.9%(40) bpsItaly14111423%23%7.7%7.8%(10) bpsJapan86843%8%6.8%6.6%20 bpsIberia564232%32%5.2%4.3%90 bpsRest of World927424%27%3.3%2.7%60 bpsLee Hecht Harrison1211201%2%28.6%27.7%90 bpsCorporate(150)(145)4%5%Adecco Group1,1601,1322%4%4.9%5.0%(10) bpsN. America, UK & I. General StaffingN. America, UK & I. Professional StaffingThe Adecco GroupBaader Helvea conference, Jan 201931
Net debt at 30 September 2018Principal at maturityin millionsMaturityFixed interest rate8-year guaranteed Euro medium-term notesEUR 50020241.00%4977-year guaranteed Euro medium-term notesEUR 50020221.50%5004-year guaranteed Euro medium-term notesUSD 30020212.625%2538-year Swiss Franc fixed rate notesCHF 12520202.625%1108-year Swiss Franc fixed rate notesCHF 10020260.875%876-year guaranteed Euro medium-term notesEUR 21420192.75%214Committed multicurrency revolving credit facilityEUR 6002023Variable rate-2018Variable rate290As of 30 September 2018French commercial paper programmeTotal in EUR millionsOtherShort- & long-term debtCash & short-term investmentsNet debtThe Adecco Group582,0097701,239Baader Helvea conference, Jan 201932
Long-term revenue performance versus peersYear-on-Year organic revenue growth20%10%0%-10%-20%-30%2007200820092010Peer 1The Adecco Group20112012Adecco Group20132014201520162017Peer 2Baader Helvea conference, Jan 201933
Continuing EBITA margin leadership6%Adjusted EBITA margin5%4%3%2%1%0%2007200820092010Peer 120112012Adecco Group20132014201520162017Peer 2Note: ‘Adjusted’ means excluding formally disclosed one-offs; 2005-9 includes the negative impact of the French Business Tax, at the time reported in EBITAThe Adecco GroupBaader Helvea conference, Jan 201934
Cash conversion has averaged 90% in last 9 years160%Average 2009-17 90%Average 2005-17 98%140%Cash 0920102011201220132014201520162017Note: ‘Cash conversion’ is calculated as last 4 quarters of free cash flow before interest and tax paid (FCFBIT) divided by last 4 quarters of EBITA excluding one-offsThe Adecco GroupBaader Helvea conference, Jan 201935
The Adecco GroupBaader Helvea conference, Jan 201936
Key DatesDateEvent28 February 2019Q4 2018 results7 May 2019Q1 2019 results8 August 2019Q2 2019 resultsThe Adecco GroupBaader Helvea conference, Jan 201937
Investor Relations TeamNicholas de la Grense, CFAHead of Investor RelationsNicholas.delagrense@adeccogroup.com 41 44 296 9192Tommaso Scalese, CFAInvestor Relationstommaso.scalese@adeccogroup.com 41 44 878 8934Investor RelationsInvestor.relations@adeccogroup.comThe Adecco Group 41 44 878 8888Baader Helvea conference, Jan 201938
Disclaimer and note on terminologyForward-looking statementsInformation in this release may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward-lookingstatements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to AdeccoGroup AG as of the date of this release, and we assume no duty to update any such forward-looking statements. The forward-looking statementsin this release are not guarantees of future performance and actual results could differ materially from our current expectations. Numerousfactors could cause or contribute to such differences. Factors that could affect the Company’s forward-looking statements include, among otherthings: global GDP trends and the demand for temporary work; changes in regulation affecting temporary work; intense competition in themarkets in which the Company operates; integration of acquired companies; changes in the Company’s ability to attract and retain qualifiedinternal and external personnel or clients; the potential impact of disruptions related to IT; any adverse developments in existing commercialrelationships, disputes or legal and tax proceedings.Non-US GAAP measures used‘Organic growth’ excludes the impact of currency, acquisitions and divestitures.‘EBITA’ refers to operating income before amortisation and impairment of goodwill and intangible assets.‘Net debt’ comprises short-term and long-term debt less cash and cash equivalents and short-term investments.‘Free cash flow’ comprises cash flows from operating activities less capital expenditures.‘Cash conversion’ is calculated as last 4 quarters of free cash flow before interest and tax paid (FCFBIT) divided by last 4 quarters of EBITAexcluding one-offs.‘Net debt to EBITDA’ is calculated as net debt at period end divided by last 4 quarters of EBITA excluding one-offs plus depreciation.The Adecco GroupBaader Helvea conference, Jan 201939
The Adecco GroupBaader Helvea conference, Jan 201940
The Adecco Group Baader Helvea conference, Jan 2019 14 Market Insights Branch Dashboard Procurement System E-Documents and Documents and Admin Automation Chatbots Pooling / Planning automation Timesheet Digitisation Sales Effectiveness Client Portal Recruiting Efficiency Candidate Portal Middle-& back-office process optimisation
