Adecco Group AG

Overview Key strengths Key risks Global leader in human resource (HR) solutions, with revenue of €24 billion in fiscal 2023. Macroeconomic uncertainties in Europe and North America to weigh on operating performance over the next 12 months. Good long-term growth prospects for temporary staffing on the back of global workforce's transition to more flexible practices, with diversification into permanent, outsourcing, consulting, and other services. Exposure to economic cycles, given talent-solution revenue is insufficient to offset cyclical declines in staffing. Participation in highly competitive and fragmented industry. Diverse client base and strong geographic presence in 60 countries. Tight headroom in credit metrics due to a temporary spike in leverage following the acquisition of Akka Technologies, although leverage is expected to return

...S&P Global Ratings continues to forecast improved profitability and deleveraging for Adecco Group AG from 2024 onward. This is despite a general macroeconomic downturn. The group's S&P Global Ratings-adjusted EBITDA margins improved slightly to 4.7% in 2023 from 4.5% in 2022. This was driven by the group's general and administrative (G&A) savings program, lower one-off costs, and improved productivity. As a result, leverage as of end-2023 remained in line with the previous year (2022: 2.6x). Leverage was slightly below our previous expectation of 2.3x due to lower free operating cash flow (FOCF), which reflected higher capital expenditure (capex) on one-off projects as well as the timing of working capital. We expect EBITDA margins to increase by 100 basis points (bps) to 5.7% in fiscal 2024. Drivers will be productivity gains, G&A cost savings, synergies from the Akkodis integration, and pricing actions. We expect mid-single digit organic growth at Adecco and Akkodis' higher-margin consulting...

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