Adecco shares jump as permanent hiring returns to growth

By Basile Day

Nov 11 - Adecco Group ADEN.S reported stronger-than-expected third-quarter operating income on Thursday and pointed to improving hiring conditions for permanent roles, sending shares in the Swiss staffing company up as much as 15.7%.

Adecco reported operating income of 180 million euros ($199.40 million), ahead of analysts' forecasts for 166 million euros, while revenue of 5.99 billion euros was in line with a company-compiled consensus.

Adecco reported that permanent recruitment returned to growth in the third quarter, adding to signs of improved confidence and a more solid overall economy.

Recruitment firms such as Adecco and Randstad RAND.AS are closely watched as indicators of economic sentiment because companies typically hire when confidence improves and pull back when conditions weaken.

"The clients that were sort of very cautious about recruiting permanently mostly because of the uncertainty ... They've decided to move ahead and they know that uncertainty is there to last, so they make the decision to recruit to prepare for the future", said CEO Denis Machuel on a media call.

"The confirmation of stabilisation in permanent placement is encouraging," broker Vontobel said in a note.

Organic revenue growth slowed to 3.6% from 5.6% in the second quarter, while Adecco France remained a weak spot, with revenue down 4% due to adverse market conditions.

"France remains a drag," Machuel said. "It's going to probably take a few quarters," referring to a return to growth in France. Adecco said weakness reflected the country's macroeconomic and political backdrop.

Shares of Adecco Group AG ADEN.S were up 15.5% to at 0905 GMT, while shares in peer Randstad were up 6.1%.

($1 = 0.9027 euros)