Strong management delivers resultsResults for the full year of 2001 showed arevenue <strong>in</strong>crease of 2% to CHF 27.2 billion.This led to a decrease <strong>in</strong> operat<strong>in</strong>g <strong>in</strong>comeof 5% to CHF 1.2 billion. Operat<strong>in</strong>g marg<strong>in</strong>dropped 30 basis po<strong>in</strong>ts to 4.3%.Income before amortisation of goodwillwas CHF 702 million, down from prior yearby 6%.Bus<strong>in</strong>ess reviewAdecco's strategy has focused on becom<strong>in</strong>gNo. 1 or 2 <strong>in</strong> the top staff<strong>in</strong>g markets aroundthe <strong>world</strong>. We have largely achieved thisgoal <strong>in</strong> the Adecco brand. We are the marketleader or <strong>in</strong> second position <strong>in</strong> 12 out of thetop 13 markets. We cont<strong>in</strong>ue to believe thatmarket leaders will outperform the <strong>in</strong>dustry,<strong>in</strong> both good times and bad.Grow<strong>in</strong>g countries helped to offset decl<strong>in</strong><strong>in</strong>gmarkets and kept sales and profit volatilitywith<strong>in</strong> a manageable range. Among thegrow<strong>in</strong>g countries was Japan, where wehave moved <strong>in</strong>to a market leadershipposition from third place essentially throughorganic growth. Revenues <strong>in</strong> Japan were up34% for the year <strong>in</strong> local currency. Thecounter-cyclical bus<strong>in</strong>esses <strong>in</strong> our portfolio,such as Lee Hecht Harrison, performedextremely well and mitigated the drop <strong>in</strong>operat<strong>in</strong>g <strong>in</strong>come and marg<strong>in</strong>s. Nowadays,Career Services account for over 10% of ouroperat<strong>in</strong>g profit. Growth <strong>in</strong> Lat<strong>in</strong> Americawas particularly pleas<strong>in</strong>g as we achieved an<strong>in</strong>crease of 24% <strong>in</strong> revenues over prior year<strong>in</strong> these <strong>in</strong>creas<strong>in</strong>gly important andchalleng<strong>in</strong>g markets.While market leadership <strong>in</strong> our corestaff<strong>in</strong>g bus<strong>in</strong>ess rema<strong>in</strong>s critical to oursuccess, Adecco has the opportunity toaccelerate its growth by expand<strong>in</strong>g <strong>in</strong>toHuman Resources and Bus<strong>in</strong>ess Services.A re-organization along bus<strong>in</strong>ess l<strong>in</strong>esto facilitate this strategy was announced<strong>in</strong> October. These new bus<strong>in</strong>ess l<strong>in</strong>es willoperate globally and are focused onbuild<strong>in</strong>g Adecco's capabilities <strong>in</strong>Ma<strong>in</strong>stream Staff<strong>in</strong>g, Professional Staff<strong>in</strong>g,Managed Services, Career Services,e-Recruit<strong>in</strong>g and other human resourcesservices. We have appo<strong>in</strong>ted threepresidents to lead these bus<strong>in</strong>ess l<strong>in</strong>es, allfrom with<strong>in</strong> the Adecco organization. Thisnew structure will allow us to cont<strong>in</strong>ue fastgrowth <strong>in</strong> our core staff<strong>in</strong>g bus<strong>in</strong>ess, whileconcurrently extend<strong>in</strong>g the scope of ourcompany. It will also enhance our ability toprovide a broad range of services beyondtraditional staff<strong>in</strong>g to our Clients.Adecco is the No.1 company <strong>in</strong> 8, and No. 2 <strong>in</strong> 4, of the top 13markets that account for 95 % of the <strong>world</strong> staff<strong>in</strong>g market.12
Excellent technology rema<strong>in</strong>s one of thelynchp<strong>in</strong>s of Adecco’s success. Dur<strong>in</strong>g thepast year, we cont<strong>in</strong>ued to make hugestrides <strong>in</strong> the development of our Internetand technology capabilities. Despite theburst<strong>in</strong>g of the dot com bubble, the Internetis now more important to our bus<strong>in</strong>essthan ever. We are gett<strong>in</strong>g down to the nubof this technology – allow<strong>in</strong>g <strong>in</strong>stant accessto <strong>in</strong>formation - anytime, anywhere it isneeded. We cont<strong>in</strong>ue to strive to have theInternet available on all desktops <strong>in</strong> thecompany, and will have Internet access <strong>in</strong>over 95% of our offices by July 2002. Overthe past three years, we have <strong>in</strong>vested nearlyCHF 1 billion <strong>in</strong> our technology <strong>in</strong>itiatives,<strong>in</strong>tegrat<strong>in</strong>g the web <strong>in</strong>to our bus<strong>in</strong>ess anddevelop<strong>in</strong>g new web-based bus<strong>in</strong>esses.Our vision of deliver<strong>in</strong>g our bus<strong>in</strong>ess on abrowser is com<strong>in</strong>g ever closer to realization.Nowhere has this <strong>in</strong>tegration of the Internetwith our core branch bus<strong>in</strong>ess been moredramatic than <strong>in</strong> Italy. Adecco.it, the <strong>world</strong>’sfirst fully web-enabled recruitment andstaff<strong>in</strong>g system grew from strength tostrength, generat<strong>in</strong>g over 300,000 applicantsby the end of 2001 and mak<strong>in</strong>g a substantialcontribution to our revenues <strong>in</strong> Italy. It isfully <strong>in</strong>tegrated to allow Clients to managethe entire staff<strong>in</strong>g process on-l<strong>in</strong>e, whilegiv<strong>in</strong>g job seekers a quick and powerful jobsearch tool. We are on schedule to launchsimilar systems throughout Europe –capitaliz<strong>in</strong>g upon the success of the pilot<strong>in</strong>itiative <strong>in</strong> Italy.To ensure that we respond to marketconditions, we cont<strong>in</strong>ue to implementsensible cost control measures. However,we rema<strong>in</strong> committed to ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g ourbranch network. This year we added 12%more branches while some competitorswere contract<strong>in</strong>g. We now have nearly6,000 branches <strong>in</strong> total, spann<strong>in</strong>g58 countries. Our experience shows thatma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g branches dur<strong>in</strong>g a downturnis critical to improv<strong>in</strong>g market share whenbus<strong>in</strong>ess revives.As the market leader, Adecco stronglypromotes legislation that encouragesflexible work. Countries with flexible labourmarkets have shown they can reduceunemployment and <strong>in</strong>crease productivity,thus provid<strong>in</strong>g real benefits to workers aswell as Client organizations and society <strong>in</strong>general. The benefits to organizations and<strong>in</strong>dividuals of more liberal flexible workregulations have been demonstrated <strong>in</strong>Spa<strong>in</strong>, Italy and Japan, where temporarywork laws have been eased <strong>in</strong> the last fiveyears.The positive role of our <strong>in</strong>dustry <strong>in</strong> societyis there for all to see, with reducedunemployment, more flexible careerchoices and <strong>in</strong>creased productivity. S<strong>in</strong>cethe laws <strong>in</strong> Spa<strong>in</strong> were liberalized five yearsago, the Spanish staff<strong>in</strong>g market has growndramatically to nearly CHF 3 billion. As thecountry becomes more accustomed to theuse of staff<strong>in</strong>g services, the market couldpotentially be worth CHF 6 billion. Italy isdevelop<strong>in</strong>g the same way as Spa<strong>in</strong>, thoughperhaps even more rapidly. Staff<strong>in</strong>g waslegalized <strong>in</strong> January 1998, at which timeAdecco had few branches <strong>in</strong> Italy. We haves<strong>in</strong>ce opened over 500 branches and todaythe country accounts for CHF 1.2 billion ofbus<strong>in</strong>ess.Most recently, the Japanese temporarystaff<strong>in</strong>g market has grown nearly 20% yearon year s<strong>in</strong>ce the Temporary Dispatch Lawwas modified <strong>in</strong> December 1999, <strong>in</strong>ject<strong>in</strong>gnew flexibility <strong>in</strong>to the economy andprovid<strong>in</strong>g additional options for both<strong>in</strong>dividuals and corporations. We rema<strong>in</strong>conv<strong>in</strong>ced that there is great potential togrow our bus<strong>in</strong>ess <strong>in</strong> those places that haveyet to fully adopt laws encourag<strong>in</strong>g the useof flexible work. We strongly endorselegislation that provides protection forworkers without restrictions on the use offlexible work. It is good for our <strong>in</strong>dustry,temporary Associates and the wider society.Adecco will cont<strong>in</strong>ue to contribute to sett<strong>in</strong>gthe labour market agenda. We also realizethat support<strong>in</strong>g research <strong>in</strong>to lead<strong>in</strong>g edgebus<strong>in</strong>ess theory, practice and education is akey role of <strong>in</strong>dustry leaders. To help <strong>in</strong> thatmission, Adecco recently announced thecreation of a fully endowed chair, fundedwith £2 million, at the London Bus<strong>in</strong>essSchool. The holder of the chair will bothteach and lead research <strong>in</strong>to areas such aslabour markets and their segmentation,education f<strong>in</strong>ance, labour mobility andmigration, social capital and other relatedissues. Through endowment of this chairwe will help enhance the <strong>world</strong>’sunderstand<strong>in</strong>g of these important issues,build Adecco’s knowledge base and mostimportantly contribute to the educationand development of the bus<strong>in</strong>ess leadersof tomorrow.Outlook for the futureWhile the outlook for our bus<strong>in</strong>ess <strong>in</strong> thefirst half of 2002 is difficult, we rema<strong>in</strong>conv<strong>in</strong>ced that the medium- and long-termoutlook is as bright as ever. Thousands oforganizations and the nearly four million<strong>in</strong>dividuals we place <strong>in</strong> jobs each year havegrown to see the importance of flexiblework with Adecco. Clearly, Adecco is thebest-positioned company <strong>in</strong> the <strong>in</strong>dustry toensure they meet their goals. Moreover, weare now beg<strong>in</strong>n<strong>in</strong>g to move <strong>in</strong>to new areasof human resources services to furtherextend our reach and capacity to serve ourClients. I want to thank our 30,000 Colleaguesfor their efforts as we cont<strong>in</strong>ue to transformthe company. I am gratified by theirdedication and the cont<strong>in</strong>ued confidenceplaced <strong>in</strong> us by Clients, temporary Associatesand Shareholders. I assure you that all of usat Adecco will do our utmost to deliverexcellence as we move <strong>in</strong>to the new year.John BowmerChief Executive OfficerCEO Letter13
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