Adecco Group Ag Unsp/Adr

Good day and welcome to the ADECO Group Q4 and Fall Year 2024 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. For operating assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Benita Barreto, ADECO Group AG, Head of Investor Relations, to begin the conference. Benita, over to you.

Good morning. Thank you for joining the ADECO Group's conference call today. I'm Benita Barreto, the Group's Head of Investor Relations, and with me are the ADECO Group's CEO, Denny Mashuel, and CFO, Coram Williams. Before we begin, We want to draw your attention to the disclaimer on slide two. Today's presentation will reference GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements. These statements are based on assumptions as of today and are therefore subject to risks and uncertainties. Let me now hand over to Denny for his opening remarks.

Thank you, Benita, and a warm welcome to all of you who have joined the call today. Before we begin the presentation, I'd like to refocus your attention on the brief video that we just shared. By leveraging Salesforce's technologies, including agent force and data cloud, we are enhancing our global talent supply chain, streamlining processes, improving fill rate and time to fill, and delivering superior experiences for our job seekers. We are building a group driven by innovation where technology is a key pillar. And I will share more on our digital and IT developments later in today's call. And let me open with a full year financial results on slide four. Revenues decreased by 3% year on year on an organic trading days adjusted basis to 23.1 billion euros. Gross profit of nearly 4.5 billion euros was 7% lower year on year. Gross margin contracted 80 basis points to 19.4%, a resilient result, reflecting firm pricing and volume and mix effects. EBITDA, excluding one-offs, was €709 million, 18% lower. The EBITDA margin at 3.1% and 50 basis points lower year-on-year was resilient. driven by substantial G&S savings and agile capacity management. Importantly, it is within the margin corridor, with the group delivering a recovery ratio of 44%. Moving now to the GBUs. In ADECO, revenues were 3% lower, a resilient performance given challenging markets. The EBITDA margin was solid at 3.4%. In ACODIS, revenues were 4% lower, The tech sector downturn continued to impact staffing, and the EBITDA margin of 5.5% mainly reflects this headwind. And in LHH, revenues were 6% lower, weighed by challenging markets and a high comparison in career transition. LHH's EBITDA margin was 6.3%, but within its margin corridor of 7% to 10% when excluding impacts from General Assembly that we will explain shortly. In sum, the group has delivered strong market share gains and resilient revenues and profitability in a challenging market environment. Let's now turn to slide five, which provides KPIs that evidence how the group has delivered on its simplified execute and grow plan set out in Q4 2022. Our market share growth is a testament to the success of the execution of our plan. Since its introduction, we've achieved a relative revenue growth of 980 basis points with 200 basis points share gain in 2024 versus our key competitors. We are focused on further increasing our market share in the coming quarters. We have continued to improve customer satisfaction. In the IDCO GBU, client NPS rose 2 points and candidate NPS rose also 2 points. cementing a multi-year improvement trajectory. This year's survey highlighted the speed of ADECO in selecting the right candidates' profiles, the quantity of the candidates, the ease of the procedures, and the friendliness of the people clients dealt with. And aligned with the simplification effort, the group's rigorous approach to overheads has now delivered 174 million euros in G&A savings, net of inflation, well ahead of of the original 150 million euros run rate target. Let's turn to slide six, which shows in more depth the consistency in which we have delivered our stated ambitions. And as you can see on the slide, our achievements have been multifold regarding key highlights, In 2023, the group adjusted incentive plans, finalized its new operating model, and established its partnership with Microsoft focused on developing the group's AI architecture. It began to deliver GNS savings and took 780 basis points of market share. In 2024, we made substantial progress. We accelerated the move to shared service centers for HR and finance and overachieved the GNS savings target. We outgrew competitors by a further 200 basis points. Moreover, we introduced a comprehensive tech roadmap covering the next couple of years. We have enhanced our IT tools and solutions swiftly, better positioning the group to improve both recruiter efficiency and the customer experience materially. Looking ahead, our operational focus areas include expanding MSP, advancing AI tools and solutions, and introducing authentic AI to the business. We are committed to managing capacity with agility and rigorously focused on GNS savings, deleveraging, and delivering market check-ins. On slide seven, we provide client wins from across our GBUs that encapsulate how the group is driving market share gains and growth. First, as part of a consortium, ADECO and ACODIS won a significant multi-year contract for the armed forces in the UK. The team will develop a digital-first and comprehensive recruitment solution. The client valued ADECO's unrivaled workforce management expertise and ACODIS' strength in systems integration and development. Second, Pontoon won a large MSP contract with a leading technology company to manage its IT workforce across the US, Canada, and India. The client required a reliable solution to address regulatory compliance, workforce visibility, and operational efficiency. The client particularly valued ACODIS' IT staffing expertise and ADECO staffing know-how at scale. Finally, in LHH, Ezra expanded its collaboration with Microsoft to develop a leadership training program for copilot adoption that supports organizational transformation. The client values Ezra's technologies, which provide real-time feedback and are proven to make a measurable impact at scale. Moving now to slide eight, as we've highlighted, the group is steadfastly executing its strategy and is firmly committed to delivering on its financial targets. The balance sheet and financial structure remain sound and leverage has not constrained the execution of the group strategy. Notwithstanding, the macroeconomic and the geopolitical environment has been unfavorable for longer than we had expected. which has prevented the group from deleveraging under the current dividend policy. The group's dividend policy was based on a 40% to 50% payout ratio on adjusted EPS with a commitment to hold the dividend per share at least in line with a prior year period. Moving forward, the group's updated dividend policy will be based on a 40% to 50% payout ratio on adjusted EPS with no floor. The group reiterates its commitment to distributing excess capital to shareholders when leverage is below one times. The updated dividend policy will accelerate deleveraging and increase financial flexibility. It is well suited to a strongly cash generative yet cyclical business. And it achieves a better balance between growth investment to support a group strategic shift towards higher growth and margin markets with direct distributions to shareholders. The immediate capital allocation priority is for the group to deliver. and we target a net debt to EBITDA ratio at or below 1.5 times by end 2027. Accordingly, the board proposes to distribute a dividend per share of one Swiss franc. This represents a payout of 42% within the group's 40 to 50% pay range. Let me now hand over to Korn, who will provide insights into this quarter's results.