Adecco says economic climate to hit '08 sales growth : US Business

By Katie Reid

ZURICH (Reuters) - Adecco , the world's largest staffing firm, posted a forecast-beating 3 percent rise in first-quarter net profit but cautioned that economic weakness would weigh on its 2008 sales growth goal.

"As the economic environment is not favorable in certain parts of the world and remains generally uncertain, Adecco anticipates revenue growth for 2008 below the long-term target of 7 to 9 percent," the group said in a statement on Tuesday.

"Management expects the market in the USA and Canada to remain weak, while still anticipating moderate growth in Europe and Japan," Adecco said.

The economic slowdown in the United States, which is seen spilling into Europe, is a dark cloud hanging over the staffing sector and could overshadow Adecco's recent attempts to improve profitability by moving into the professional services market.

But the company said it was still aiming for revenue growth of at least 7 to 9 percent each year on average for the coming years and was confident it would improve the operating margin to over 5 percent by 2009.

In the first quarter, net profit edged higher to 137 million euros ($211.7 million), beating the average forecast of 122 million euros in a Reuters poll of 13 analysts, as revenues in its key France unit rose 2 percent to 1.6 billion euros.

"The results are excellent. They were ahead of expectations and the key areas of the U.S. and France were both better than expected," said Vontobel analyst Scott Weldon.

"One uncertainty going into the results was the impact of Easter and while it did have an impact on sales this did not carry through to profitability. This means the outlook for the second quarter is strong," he said.

Operating income rose 8 percent to 205 million euros on sales up 1 percent at 5.029 billion euros. The operating margin increased by 30 basis points to 4.1 percent, Adecco added.

In April, Dutch rival Randstad posted a slight rise in first-quarter net profit and forecast slowing sales growth as the economic slowdown takes its toll.

And U.S. peer Manpower reported a sharp drop in operating profit at its U.S. operations, though numbers from its international activities were higher.

(Reporting by Katie Reid; Editing by Louise Ireland)

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