ADECCO GROUP: New strategy starts to take effect!

Recruiter ADECCO published Q1 business figures that give reason for optimism. The "Simplify, Execute, Grow" strategy announced last year was solidly implemented by ADECCO in the first quarter. Sales grew +8% year-on-year to EUR 5.89 billion. Organic sales growth exceeded expectations with an increase of 3%, compared to the same period last year. Meanwhile, the operating result at EBITDA level, adjusted for non-recurring items, declined by around -1% to EUR 184 million, but was also above forecasts by EUR 4 million. The related margin did not deliver any negative surprises either, coming in at 3.1%. On the bottom line, ADECCO earned EUR 92 million, the same as in the same period last year. According to CEO Denis Machuel, the Group has gained market share in most regions. He is therefore very satisfied with the business result. With regard to the outlook, the company was optimistic overall and sees a similarly good result for 2Q23 as in 1Q23. In the medium term, ADECCO is targeting an EBITDA margin of 6%. The company is on track.

ADECCO's business data shows that it has picked up speed and it is also able to pull away from the competition. In any case, the recruiter grew faster than the market in 1Q23 and April is also said to have been robust. Unfortunately, the perception on the stock market has not changed as a result of the solid business figures. Many investors seem to attach more weight to the threat of recession. Various aspects are underestimated: The fact that the company has repositioned itself and can thus achieve higher margins, that unemployment figures are very low and that there is a shortage of personnel in many business areas. In addition, the baby boomers are gradually retiring, which further exacerbates the personnel shortage; this is not changing so quickly and ADECCO should benefit from it! Our target price: CHF 43!