Financial overview. Dominik de Daniel, Chief Financial Officer Adecco Group

Transcription

1 Financial overview Dominik de Daniel, Chief Financial Officer Adecco Group

2 Disclaimer Forward-looking statements Information in this release may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to Adecco S.A. as of the date of this release, and we assume no duty to update any such forwardlooking statements. The forward-looking statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations. Numerous factors could cause or contribute to such differences. Factors that could affect the Company s forward-looking statements include, among other things: global GDP trends and the demand for temporary work; changes in regulation of temporary work; intense competition in the markets in which the Company operates; integration of acquired companies; changes in the Company s ability to attract and retain qualified internal and external personnel or clients; the potential impact of disruptions related to IT; any adverse developments in existing commercial relationships, disputes or legal and tax proceedings. Slide 2

3 Overview On track to reach the >5.5% EBITA margin Efficient capital management Main financial priorities going forward Slide 3

4 On track to reach the >5.5% EBITA margin Slide 4

5 Revenue development since the peak in 2007 We are still 15% below the peak organically % 10% 10% % 95-27% % % -15% -30% -50% 50-70% H % Organic revenues indexed (2007=100) 1) Organic revenue growth (yoy) Slide 5

6 Revenue development since the Group s peak in 2007 A look at the main markets gap against the peak on an organic basis 200% 180% 160% 140% 120% +78% 100% 80% 60% -18% -16% -35% -9% -31% 40% 20% 0% France North America UK & Ireland Germany & Austria Japan Emerging Markets 2007 H ) Slide 6

7 Gross margin impacted by the business mix Price discipline continues to pay off 18.5% 18.2% 17.8% 17.7% 17.4% 20083) 20093) LTM Slide 7

8 An improving organic temp margin Recovering also thanks to strong price discipline year-on-year change in bps Q1 Q2 Q3 Q4 Q1 Q Slide 8

9 The outplacement business a good hedge in bad times Organic outplacement impact on Group gross margin since Q On average +40 bps gross margin impact during recessions On average -40 bps gross margin impact during expansions Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Outplacement (organic) Slide 9

10 The outplacement business a good hedge in bad times DBM increases the impact on gross margin Q3 Q4 Q1 Q Outplacement (organic) DBM Total outplacement impact DBM has added 30 bps to the Adecco Group gross margin since fully consolidated Slide 10

11 Revenues, branches and FTEs Organic development (indexed) % 10% 10% % -2% 0% -10% % % % -40% -50% 70-60% 60-70% H % Organic branches indexed (2007=100) 4) Organic FTEs indexed (2007=100) 4) Organic revenue growth (yoy) Slide 11

12 Superior profitability thanks to strict cost control and EVA Comparison to main peers during the last four quarters Adjusted 5) EBITA margin of Adecco vs. peers 4.3% 4.4% 4.1% 3.7% 3.8% 3.7% 3.1% 2.6% 1.6% 0.9% 1.1% 1.6% Q3 Q4 Q1 Q Adecco Peers Slide 12

13 Market position and profitability in H Consistent leading profitability across most regions Adecco s Adecco s market position6), 7) EBITA margin Highest peer EBITA margin 7) Lowest peer EBITA margin 7) France 8) 1 2.8% 2.4% 1.5% North America 3 4.4% 4.0% 2.0% UK & Ireland 1 1.5% 5.9% 0.5% Germany & Austria 9) 2 6.0% 4.4% -0.5% Japan 4 5.9% 3.9% 1.4% Italy 1 5.4% 5.0% 3.4% Benelux 10) 3 3.6% 6.9% n.a. Nordics 2 3.2% 3.8% 0.6% Iberia 11) 2 3.3% 1.2% 0.4% Slide 13

14 How we reach our EBITA margin target Revenue growth needed Revenue growth EVA method Price discipline Mix improvement Cost control Profitability preservation and enhancement Operating Cash Flow >5.5% EBITA margin Slide 14

15 Efficient capital management Slide 15

16 Cash flow and DSO development Consistent operating cash flow generation throughout the cycle 1, , ,062 1, , Cash Flow from operating activities DSO development Slide 16

17 Strong balance sheet Net debt-to-ebitda very well controlled Year-End ) Year-End 2009 Year-End 2010 Year-End 2011 Net Debt MCB impact Net Debt/EBITDA 13) -2.2 Slide 17

18 A sustainable increase in the pay-out to shareholders Dividend payments since % Highest dividend ever % 9% 8% 7% % % % 5% 4% % 1.3% 1.8% 3% 2% 1% % Dividend per share in CHF Dividend Yield 14) From 2011, the target pay-out range has been increased to 40-50% 15) from historically 25-30% 15) Slide 18

19 Efficient capital management Planned EUR 400 million share buyback The buyback The financing EUR 400 million Planned cancellation of the repurchased shares Purchase started on July 10, 2012 on the second trading line 5-year CHF ) million bond, coupon 1.875% 8-year CHF 125 million bond, coupon 2.625% Efficient capital management Investment-grade rating unchanged Slide 19

20 Liquidity and debt maturity profile As of June 30, 2012, including the bonds issued in mid-july 1, June ) 18) Cash & equivalents Committed open facility Bond proceeds Short/mid & other debt Commercial paper Bonds Committed facility Bonds issued in mid-july Slide 20

21 The Mandatory Convertible Bond Limited impact upon maturity The facts 3-year CHF 900 million Mandatory Convertible Bond Issued in November 2009 to finance the MPS acquisition Equivalent to a pre-paid forward sale of Adecco shares What s next? Maturity on November 26, 2012 Adecco plans to deliver its shares held in treasury No impact on number of shares issued No further coupon payments going forward Classified as equity under US GAAP Adecco to deliver between 16.0 million shares (maximum conversion price of CHF 56.37) and 19.2 million shares (minimum conversion price of CHF 46.98) Slide 21

22 Main financial priorities going forward Slide 22

23 Sequential revenue analysis Relative momentum in 2012 is far more resilient than in Adecco Group Q1 Q2 Q3 Q Slide 23

24 Trend towards larger branches FTE employees per branch Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Actual FTEs per branch Trend Slide 24

25 Development of Return on Capital Employed (ROCE) 2007 until 2011 based on a 30% tax rate 4,510 4,000 3,405 3,581 3,320 3,771 30% 3, % 14.6% 20% 2, % 1, % 11.8% % future 0% NOPAT Average Invested Capital ROCE NOPAT = Net Operating Profit After Taxes (operating income minus 30% income tax). Average invested capital = assets minus liabilities excluding cash and cash equivalents, short-term investments and interest-bearing liabilities. ROCE = NOPAT/average invested capital. Slide 25

26 Conclusion - The next 2 years Revenue growth EVA method Price discipline Mix improvement Cost control Efficient Capital Management Profitability preservation and enhancement Operating Cash Flow >5.5% EBITA margin Increased ROCE Slide 26

27 Notes to the slides Details on sources, estimates, adjustments and other 1) Organic Revenue growth is referring to each period shown. The relative revenue level of H against 2007 is calculated by compounding the organic growth rates in the period; the rate of H is annualised with multiplication by a factor of ) The relative revenue level of H against 2007 is calculated by compounding the organic growth rates in the period for each region; the rate of H is annualised with multiplication by a factor of 0.5. For all countries, 2007 = ) Based on the French Business Tax law effective January, 1, 2010, a part of the business tax is computed based on added value and therefore under US GAAP classified as income tax. For better comparison, figures for 2008 and 2009 are excluding the impact of the French business tax figures exclude on gross profit the positive impact of the modified calculation of French social charges of EUR 63 million and from restructuring charges of EUR 8 million as well as the negative impact of the French business tax of EUR 84 million figures exclude on gross profit the positive impact of EUR 25 million due to favorable developments in France resulting in the reassessment of existing accruals and the negative impact of EUR 7 million due to a sales tax accrual in the UK related to prior years and of the French business tax of EUR 61 million. 4) For Branches and FTEs, the relative level of H against 2007 is calculated by compounding the organic growth rates in the period; the rate of H is annualised with multiplication by a factor of ) For Adecco: Q3 11 figures exclude on EBITA the negative impact of EUR 2 million DBM-related integration costs; Q4 11 figures exclude on EBITA the negative impact of costs related to the DBM integration for EUR 12 million; Q1 12 figures exclude on EBITA the negative impact of costs related to the DBM integration for EUR 3 million and EUR 8 million related to restructuring for various European countries; Q2 12 figures exclude on EBITA the negative impact of costs related to the DBM integration for EUR 2 million and EUR 7 million related to restructuring for various European countries and Japan. Peer EBITA margins are either shown as reported or adjusted as disclosed. When competitors EBITA is not disclosed, EBIT is used. 6) Based on Revenues. 7) Ranking includes selected main and local competitors for which data is publicly available (Japan, based on H1 and Q figures). Peer EBITA margins are either shown as reported or adjusted as disclosed. When competitors EBITA is not disclosed, EBIT used. 8) H1 12 figures exclude on EBITA the negative impact of restructuring costs for EUR 8 million. 9) H1 12 figures exclude on EBITA the negative impact of restructuring costs for EUR 3 million. 10) H1 12 figures exclude on EBITA the negative impact of restructuring costs for EUR 1 million. 11) H1 12 figures exclude on EBITA the negative impact of restructuring costs for EUR 1 million. Slide 27

28 Notes to the slides Details on sources, estimates, adjustments and other 12) Net Debt as of Q4 09 adds EUR 587 million of cash which was obtained from the issue of the Mandatory Convertible Bond in November 2009 and used in Q1 10 for the MPS acquisition. 13) The EBITDA refers to the 12 months before the end of each period. 14) The dividend yield is calculated on the closing share price for each corresponding year. 15) The pay-out ratio is based on adjusted net earnings. 16) CHF 250 million issued in June Additional CHF 100 million issued with re-opening in September ) Committed open facility of EUR 529 million available out of a total of EUR 600 million of which EUR 71 million are used for letters of credit as of June 30, ) Bond proceeds net of issuance costs, for the bonds issued in mid-july (5-year CHF 250 million bond and 8-year CHF 125 million bond). Slide 28