Adecco Group Investor Presentation. May 2016

Transcription

1 Adecco Group Investor Presentation May 2016

2 Disclaimer and Note on Terminology 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 Group AG as of the date of this release, and we assume no duty to update any such forward-looking 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 forwardlooking statements include, among other things: global GDP trends and the demand for temporary work; changes in regulation affecting 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. 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. Slide 2

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4 Highlights Q Revenues EUR 5.3 billion, up 4% yoy organically Gross margin of 19.0%, down 10 bps; gross profit up 2% organically SG&A up 4% yoy organically EBITA of EUR 228 million EBITA margin of 4.3%, down 30 bps yoy Revenues in March & April combined up 3%, organically and adjusted for trading days Slide 4

5 Revenue development by region 1) Organic year-on-year change in percent 15% 10% Europe grew by 4% in Q1 2016, compared to 6% in the previous quarter 5% 0% -5% -10% -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Europe North America Rest of World (incl. Japan) North America grew by 1% in Q1 2016, the same as in the previous quarter Rest of World (incl. Japan) grew by 10% in Q compared to 11% in the previous quarter 1) Excluding LHH. Slide 5

6 Sequential revenue analysis Adecco Group Q1 Q2 Q3 Q4 Above long-term growth trend 1) In line with longterm growth trend 1) Below long-term growth trend 1) 1) Long-term growth trend is the 12-year median of sequential growth for the relevant quarter, adjusted for currency, acquisitions, divestitures and trading days. Slide 6

7 Revenues and EBITA by segment Q vs. Q Revenues EBITA % of revenues EUR millions Organic change yoy EUR millions Margin Margin change yoy 21% France 1,105 7% % -30 bps 22% North America 1,149 1% % 20 bps 10% UK & Ireland 545 0% % -20 bps 9% Germany, Austria, Switzerland 509-2% % -270 bps 8% Benelux and Nordics 436 5% % 0 bps 6% Italy 319 9% % 140 bps 6% Japan 300 2% % 40 bps 4% Iberia 220 9% 7 3.4% -90 bps 12% Rest of World % % -60 bps 2% Lee Hecht Harrison 106 1% % 0 bps Corporate (40) 100% Adecco Group 5,332 4% % -30 bps Slide 7

8 Net debt development In EUR millions ,437 1,023 1,258 1, ,056 1,249 1,039 1,209 Q Net Debt / EBITDA 1) of 1.0x Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 1) Last 4 quarters EBITDA, calculated as: EBITA excluding one-offs plus depreciation. Slide 8

9 Debt and cash & short term investments As of March 31, 2016 Principal at maturity Maturity Fixed interest rate Total in EUR million 5-year Swiss Franc fixed rate notes CHF % year guaranteed Euro medium term notes EUR % year guaranteed Euro medium term notes EUR % year Swiss Franc fixed rate notes CHF % year guaranteed Euro medium term notes EUR % 499 Committed multicurrency revolving credit facility EUR Variable rate 0 1) French Commercial Paper program 0 Other 141 Short & long term debt 1,971 Cash & short term investments 762 Net Debt 1,209 1) EUR 8 millions used for letters of credit Slide 9

10 Completion of acquisition of Penna Consulting Plc On March 9, 2016 the Adecco Group announced a recommended cash offer for UK AIM-listed Penna Consulting Plc On May 9, 2016 the scheme of arrangement to implement the recommended offer was sanctioned by the UK court and the transaction is expected to close during today, May 10, 2016 In-line with the Adecco Group s acquisition strategy, Penna represents an excellent strategic fit with the Adecco Group s existing operations Penna has three business units: career transition, talent development and recruitment solutions; these will complement and strengthen the Adecco Group s businesses in the UK and beyond The transaction is expected to deliver positive EVA within 3 years, underpinned by cost synergies Enterprise value of approx. GBP 95 million represents multiple of approx. 11x EBITDA for the 12 months ended March 31, 2016, before cost synergies Slide 10

11 Current trading Adecco Group: In March and April, revenue growth was 3%, organically and adjusted for trading days Europe: Growth improved slightly in France and moderated in Italy, Iberia and Benelux North America: USA broadly stable, challenging conditions in Canada Rest of the World: Continued modest growth in Japan, strong growth emerging markets Slide 11

12 Adecco Group Slide 12

13 Our global reach We help around 700,000 people find work every day through our network of more than 32,000 full-time employees and around 5,100 branches in over 60 countries and territories around the world. The Adecco Group is the world s leading provider of HR solutions. Our services and solutions fall into the broad categories of temporary staffing, permanent placement, career transition and talent development as well as outsourcing and consulting. Slide 13

14 Revenue and Gross Profit 2015 FY 2015 revenues by segment 22% 21% 10% 8% 5% 20% 14% France North America UK & Ireland Germany & Austria Japan Rest of Europe 1) Other 1) Excluding Emerging Markets FY 2015 gross profit by service 72% Temporary 10% Perm 8% Outplacement 10% Outsourcing, talent development and other services FY 2015 revenues by business line 26% Professional & Solutions 74% General Staffing 46% 20% 16% 7% 11% Information Technology Engineering & Technical Finance & Legal Medical & Science Solutions Slide 14

15 Revenues and EBITA by segment FY 2015 vs. FY 2014 Revenues EBITA 1) % of revenues EUR millions Organic change yoy EUR millions Margin Margin change yoy 22% France 1) 4,714 2% % 90 bps 21% North America 1) 4,670 2% % 40 bps 10% UK & Ireland 2,285 0% % 20 bps 10% Germany, Austria, Switzerland 1) 2,190 1% % 10 bps 8% Benelux and Nordics 1,815 3% % -70 bps 6% Italy 1,300 18% % 130 bps 5% Japan 1) 1,119 4% % 40 bps 4% Iberia % % 50 bps 12% Rest of World 1) 2,623 12% % 0 bps 2% Lee Hecht Harrison 1) 396 1% % -40 bps Corporate 1) (119) 100% Adecco Group 1) 22,010 4% 1, % 40 bps 1) In FY 2015, excluding one-offs comprising integration costs of EUR 11 million in Lee Hecht Harrison, the write-down of capitalized software of EUR 12 million in Japan and EUR 33 million in Corporate, and contractual obligations related to changes in the Executive Committee of EUR 10 million. In FY 2014, excluding one-offs comprising restructuring costs of EUR 4 million in France, EUR 18 million in North America, EUR 14 million in Germany & Austria and EUR 1 million in Emerging Markets. Slide 15

16 Highly experienced Executive Committee Chief Executive Officer Alain Dehaze (16) Geographies Functions France Christophe Catoir (20) Asia Pacific Christophe Duchatellier (23) Chief Financial Officer Hans Ploos van Amstel (new) North America Bob Crouch (20) Iberia and Latin America Enrique Sanchez (22) Chief HR Officer Shanthi Flynn (new) UK & Ireland John Marshall (17) Northern Europe Mark De Smedt (13) Chief Sales & Innnovation Officer Federico Vione (16) Germany, Austria, Switzerland Franz-Josef Schurmann (new) Italy, E. Europe & MENA, India Sergio Picarelli (22) Chief Marketing & Comms. Officer Stephan Howeg (9) (xx) indicates number of years in the staffing industry Slide 16

17 Clear approach to drive relative TSR Implement our Strategic Priorities + Leverage the EVA Approach = Drive Relative TSR EVA Slide 17

18 The HR services industry: 5 customer drivers ECONOMY TECHNOLOGY DEMOGRAPHICS SOCIOLOGY REGULATION Slide 18

19 The future of work: 5 candidate trends ANYWHERE & ANYTIME GLOBAL MOBILITY INCLUSIVE WORKFORCE WORK-LIFE BLEND DISTINCT ATTITUDES Slide 19

20 Our strategic priorities for 2016 to Segmentation To diversify our portfolio and ensure correct delivery model 2. Perm Placement To build a perm culture of excellence in PS and GS 3. Professional Staffing & Solutions To further strengthen worldwide leadership 4. Digital To digitize our business and become a leading innovator 5. Engagement To drive even greater engagement amongst our employees 6. Thought Leadership To be perceived as the leading labour market expert Slide 20

21 Leveraging the EVA approach Focus Area Sales 1. Accelerate relative sales growth 2. Drive SG&A productivity Asset efficiency EVA Margin Reinforce our leading EBITA margins Enhance focus on cash flow and ROI 5. Exploit buy-and-build M&A opportunities Slide 21

22 Solid organic sales growth cumulative # 1 # 2 # 3 Netherlands Belgium & Lux. LHH/Right Mgmt. Adecco Peer 1 Peer 2 Adecco Peer 1 Peer 2 Adecco Peer 2 France Peer 2 Adecco Peer 1 UK & Ireland Peer 2 Adecco Peer 1 Germany & A. Italy Iberia North America Japan Peer 2 Adecco Peer 1 Peer 2 Adecco Peer 1 Peer 2 Adecco Peer 1 Peer 1 Adecco Peer 2 Peer 1 Adecco Peer 2 Sw itzerland Peer 1 Adecco Australia & NZ Peer 1 Peer 2 Adecco Note: shows ranking by cumulative organic sales growth for 2014 and 2015 Slide 22

23 Adecco previously led in revenue growth, but recently lagged 7% 7% 6% 6% 6% 6% 6% Organic revenue growth 5% 4% 4% 4% 4% 3.5% 3% 3% 5% 3% 4% 4% 5% 4% 4% 4% 5% 2% 2% 2% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Adecco Peer 1 Peer 2 Slide 23

24 Launched new initiative to reinforce cost leadership Cost leadership Focus areas of new initiative Procurement Branch efficiency Middle office and back office Growth with operating leverage Central functions IT Slide 24

25 Leading EBITA margin amongst global peers in most markets # 1 # 2 # 3 France North America UK & Ireland Germany & A. Adecco Peer 2 Peer 1 Adecco Peer 1 Peer 2 Adecco Peer 1 Adecco Peer 1 Iberia Adecco Peer 1 Italy CTTD Adecco Peer 2 Adecco Peer 2 Netherlands Belgium/Lux. Peer 1 Peer 1 Adecco Adecco Note: shows ranking by FY 2015 EBITA excluding disclosed one-offs; CTTD = Career Transition and Talent Development Slide 25

26 Acting to broaden our margin leadership Adjusted EBITA margin in Adecco business units* Margin >6% EUR 8.6b sales Margin 3% - 6% EUR 6.9b sales Margin <3% EUR 3.6b sales * Excludes Emerging Markets, LHH, BPO Solutions business units Slide 26

27 Cash flow and DSO development Cash Flow from operating activities DSO development 45 Slide 27

28 Net debt and Net Debt / EBITDA 1) development 2) In EUR millions 1.0x 1.1x 1.1x 0.9x 0.8x , , Net debt ND/EBITDA 1) Annual EBITDA, calculated as: EBITA excluding one-offs plus depreciation. 2) Due to the adoption of ASU Presentation of debt issuance costs in Q4 2015, Net Debt figures have been restated. Slide 28

29 Continuation of shareholder-friendly dividend policy 2.5 Adecco Peer 1 Peer Dividend per Share in EUR Slide 29

30 Clear capital allocation principles Invest in profitable growth through our six strategic priorities Committed to investment grade credit rating Maintain progressive dividend policy with payout of 40-50% and DPS at least in-line with prior year* Exploit buy-and-build M&A opportunities Return excess cash to shareholders * Barring seriously adverse economic conditions Slide 30

31 Disciplined acquisition approach for value creation Buy-and-build acquisition strategy means that with any acquisition 1. We accelerate our strategic development, broadening and diversifying our offering 2. We are a better owner of the business, achieving revenue and/or cost synergies with our existing activities 3. We create value for our shareholders, delivering positive EVA within 3 years Slide 31

32 Our through-cycle targets for driving shareholder value Through-Cycle Targets for Organic Revenue Growth At least in line with main peers, at group level and in each major market EBITA Margin Leadership Increase to % on average* through-cycle Higher peak and trough than prior cycle Industry-leading productivity and flexibility Relative TSR Top-tier Relative TSR Cash Conversion Focus Operating Cash Flow conversion** of >90% on average through-cycle * Excluding one-offs; ** FCF before interest and income tax paid as a percentage of EBITA excluding one-offs Slide 32

33 Target: organic revenue growth at least in-line with main peers 20% 15% CAGR vs peers = equal CAGR vs peers = (2)% 10% Organic revenue growth 5% 0% -5% -10% -15% -20% -25% -30% Adecco Peer 1 Peer Slide 33

34 Target: EBITA margin % average through-cycle 6.0% 5.0% Average = 4.2% Average = 4.3% 4.0% Adjusted EBITA margin 3.0% 2.0% 1.0% 0.0% % Note: shown adjusted for the change in French Business Tax Slide 34

35 Target: EBITA margin leadership 6.0% 5.0% Adjusted EBITA margin 4.0% 3.0% 2.0% 1.0% Adecco Peer 1 Peer 2 0.0% Note: includes the negative impact of the French Business Tax, at that time reported in EBITA Slide 35

36 Target: cash conversion* >90% on average through-cycle 160% 140% Average = 87% Average = 100% 120% Operating Cash Conversion 100% 80% 60% 40% 20% 0% * FCF before interest and tax paid as a percentage of EBITA excluding one-offs Slide 36

37 New EC remuneration reflects EVA drivers and relative TSR STIP LTIP Sales growth Relative TSR DSO EVA EBITA Slide 37