Adecco: French ties

Adecco, the Swiss recruitment specialist, aims to please its clients by finding them temporary staff, often blue-collar. The company makes nearly three-quarters of its profits this way. Group profits have gone up in recent years. The management team that delivered this improvement, ironically, had given the market a sense of its own permanence.

That changed on Thursday when the company announced first-quarter profits that were a bit better than expected. However, both Patrick De Maeseneire, the chief executive, and Dominik de Daniel, his chief financial officer, resigned. The former had been at the company for a decade. The market had clearly grown accustomed to these two: Adecco's shares plunged by 6 per cent.

Here is why. Mr De Maeseneire had brought down overheads at Adecco to such an extent that although revenues (€20bn last year) had hardly moved since 2011, operating profits before amortisation charges had risen by 14 per cent. This lift came in what is regarded as the most mature segment of the recruitment market. Adecco's shares doubled over the period.

While its margins have returned to pre-2008 levels near 4.9 per cent, Mr De Maeseneire had promised to exceed this by the end of this year. To hit his target of 5.5 per cent would have meant adding the same amount of profitability gained over three years - a tall order. That may explain his desire to take on "new challenges".

Nevertheless, his successor has a good pedigree. Alain Dehaze had run the important French division, which accounts for a quarter of group revenues and is the top contributor to profits. Interestingly, there was no shift on the target for profitability.

Losing one key executive looks unfortunate, but two at once looks careless. Understandably the changes have unsettled the market. The new team must waste no time establishing that the previously successful strategy was not temporary.

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