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Investing.com -- Adecco (SIX:ADEN) said on Wednesday that it is seeing early signs of a pickup in the global hiring market as it reported fourth-quarter earnings that slightly exceeded expectations, and announced a much-anticipated dividend cut. The company’s shares jumped nearly 10% in European trading.
The Swiss staffing firm noted that hiring volumes were "stabilizing" in the final three months of 2024 and that momentum was improving at the start of 2025.
"We are increasingly confident that markets will improve," CEO Denis Machuel said in a statement.
Adecco reported a drop in sales and operating profit in the quarter, reflecting continued caution among employers amid political and economic uncertainty.
Revenue declined 5% on an adjusted basis, factoring in trading days, currency effects, and acquisitions, to 5.87 billion euros ($6.16 billion), in line with analyst estimates compiled by the company.
Operating profit dropped 20% to 144 million euros but came in ahead of the 130 million euros expected. Net profit reached 73 million euros, also surpassing forecasts of 63 million euros.
Fourth-quarter EBITA came in at 187 million, ahead of the consensus estimate of €177 million, before accounting for €26 million in one-off costs.
The company’s gross margin was slightly better than expected, narrowing by 40 basis points instead of the forecasted 50 basis points.
One of the highlights of the report is Adecco’s change in dividend policy.
The company has removed its previous dividend floor and will now distribute 40-50% of adjusted earnings per share (EPS) going forward.
As a result, the dividend per share (DPS) for this year has been set at CHF 1.00, a sharp reduction from CHF 2.50 last year.
“We think this makes sense and Adecco now has a target to de-lever to at or below 1.5x by end-2027,” RBC Capital Markets analysts commented.
For the first quarter of 2025, Adecco anticipates a sequential increase in its gross margin, whereas RBC’s forecasts had expected it to remain flat.
Barclays (LON:BARC) analysts also welcomed the dividend cut decision.
“This is good for the equity story: it accelerates the deleveraging process and alleviates some of the concerns that have been pressuring the shares and investment case over the last few months, in our view,” they noted.