Q2 HIGHLIGHTS (Q2 08 vs. Q2 07)
- Revenues of EUR 5.2 billion, down 1% ( -1% organically[1])
- Gross margin up 50 bps to 18.1% on an underlying[2] basis
- EBITA and operating income, up 14% organically and underlying
- Strong EBITA margin improvement, up 70 bps to 5.0% on an underlying basis
- Modified French social charges favourably impacted net income by EUR 36 million
- Reported basic EPS of EUR 1.21 (up 19% on an underlying basis)
- Adecco plans to repurchase up to an additional 2% of issued shares

KEY FIGURES

EUR millions (except EPS) Q2 2008
reported Q2 2008 underlying[2] (excluding French
social charges impact) Q2 2008
underlying[2]
organic[1] growth

Revenues 5,202 5,202 -1%
Gross profit 1,003 942 2%
EBITA 316 262 14%
Operating income 304 250 14%
Net income 212 176
Basic EPS 1.21 1.01

August 12, 2008: The Adecco Group, the worldwide leader in Human Resource services, today announced results for the second quarter of 2008. Revenues of EUR 5.2 billion were down 1% organically compared to Q2 2007. Underlying organic EBITA increased by 14%. Adecco improved the underlying EBITA margin by 70 bps to 5.0%.

Dieter Scheiff, Chief Executive Officer of the Adecco Group said: "Adecco continues to deliver profit growth, despite a more challenging economic environment. I am particularly pleased with our achievement of reaching an underlying EBITA margin of 5.0% in the second quarter of 2008, up 70 bps compared to the same period last year. We further expanded the underlying gross margin, particularly in the professional business lines, while we continued to manage costs carefully. We remain fully committed to reach an EBITA margin in excess of 5.0% in 2009."

"Looking ahead, we anticipate a more challenging second half of 2008 in terms of revenue development. Most European markets have seen demand contracting during the second quarter of 2008. Japan showed similar developments to Europe, while demand in the US remained weak. The Emerging Markets continued to grow strongly."

FINANCIAL PERFORMANCE
Revenues
Group revenues for Q2 2008 were down 1% to EUR 5.2 billion compared with Q2 2007. On a constant currency basis, Adecco grew revenues by 2%, while organically revenues were down by 1%. Permanent placement revenues grew 5% in constant currency to EUR 100 million in the quarter. The quarter had a 2% positive trading day impact compared to the same period last year.

Gross Profit
In Q2 2008 the gross margin stood at 19.3% on a reported basis compared to 20.3% in the prior year. Adjusted for the impact of the modified calculation of French social charges, gross margin improved by 50 bps to 18.1% compared to the second quarter of 2007. The increase can largely be attributed to a higher gross margin in the temporary staffing business. The acquisition of Tuja added 10 bps to the Group's gross margin.

Selling, General and Administrative Expenses (SG&A)
SG&A declined by 8% in the period under review. Underlying and organically, SG&A was down 2%, reflecting a decrease in SG&A as a percentage of revenues by 20 bps to 13.1% when comparing to Q2 2007. Organically, FTEs declined by 1% (-400 FTEs) compared to the same quarter last year. At the end of the second quarter, Adecco operated a network of over 6,700 offices with over 36,500 FTEs.

Operating Income before Amortization of Intangible Assets (EBITA)
In the second quarter of 2008, EBITA was reported at EUR 316 million, a decrease of 3% compared to Q2 2007, but up 14% organically and adjusted for the modified calculation of French social charges. Adecco achieved an improvement in the underlying EBITA margin by 70 bps to 5.0% in the second quarter of 2008 versus the same period last year.

Amortisation of Intangible Assets
Amortisation increased to EUR 12 million from EUR 4 million in the same quarter last year due to the acquisition of Tuja, which was consolidated as of August 2007.

Operating Income
Operating income in the second quarter of 2008 was EUR 304 million, a decline of 6% compared with Q2 2007 or an increase of 14% organically and adjusted for the modified calculation of French social charges.

Interest Expense and Other Income / (Expenses), net
The interest expense amounted to EUR 16 million in the period under review, which compares to EUR'13 million in Q2 2007. For the full year 2008, the interest expense is expected to be approximately EUR 58 million. Other income / (expenses), net was EUR 7 million in Q2 2008 compared to EUR 10 million in Q2 2007. Lower interest income is the main reason for the difference.

Provision for Income Taxes
The effective tax rate for the second quarter of 2008 was 28% compared with 30% in the same period last year. For 2008 Adecco expects an effective tax rate of approximately 28%, based on current operations.

Net Income and EPS
Net income was down 5% to EUR 212 million in the second quarter of 2008 (Q2 2007: EUR 222 million), resulting in a net income margin of 4.1%. Basic EPS was EUR 1.21 (EUR 1.20 in Q2 2007). The modified calculation of French social charges had a positive impact of EUR 0.20 on Q2 2008 EPS compared to a positive impact of EUR 0.36 on Q2 2007. Consequently basic EPS increased by 19% on an underlying basis.

Balance Sheet, Cash-flow and Net Debt[3]
The Group generated EUR 238 million of operating cash flow in the first half of 2008, paid dividends of EUR 163 million, invested EUR 48 million in capex and paid EUR 269 million for treasury shares. Primarily as a result of the previous items, the net debt position increased to EUR 1,190 million at the end of June 2008 compared with EUR 866 million at the end of 2007. In the second quarter of 2008, DSO improved by 0.7 to 57.6 days compared to the second quarter of 2007.

Currency Impact
In Q2 2008, currency fluctuations had a negative impact of approximately 3% on revenues and operating income, mainly due to the weakness of the US dollar and the British pound.

GEOGRAPHICAL PERFORMANCE
(The pie charts are visable in the PDF version of the report)
In France, Adecco's revenues declined by 1% to EUR 1.8 billion in Q2 2008. Operating income, excluding the French social tax benefit in 2008 and 2007, declined by 8% to EUR 71 million compared to EUR 77 million in Q2 2007. This reflects an underlying operating income margin decline of 30 bps to 4.0%. While the gross margin held up well, driven by good growth in the permanent placement business, SG&A as a percentage of sales increased by 30 bps. Aligning the cost base with revenue developments continues to be at the forefront of management's priorities.

In USA & Canada, revenues declined by 7% in constant currency (organically -6%) to EUR 665 million in Q2 2008. The decline was most significant in the Industrial & Office business. Revenues in Human Capital Solutions increased significantly. Operating income declined by 21% in constant currency, while the operating income margin was lower by 70 bps at 4.0%. Expenses in connection with the investments to improve customer mix and cost efficiency were EUR 4 million in the quarter.

In the UK & Ireland, revenues in Q2 2008 declined 13% in constant currency. Business, particularly in the Industrial segment, as well as in Engineering & Technical and Information Technology, remained weak in terms of revenue development. Revenues in the Office business declined by 4% in constant currency. Operating income in constant currency increased by 27% compared to Q2 2007, while the operating income margin improved by 120 bps to 3.9%.

On August 1, 2008 Catherine King (45) joined the Adecco Group as the new country manager of UK & Ireland. Catherine has extensive experience in the staffing industry, having held various executive positions with other global staffing services companies

In Germany, revenues grew 62% in Q2 2008 and 6% organically to EUR 406 million. Organic growth was driven by good demand in the professional business lines. Operating income grew 89% (34% organically) compared to Q2 2007, corresponding to an operating margin of 10.8% (Q2 2007: 9.2%).

In Japan, second quarter revenues grew 2% in constant currency. Excellent cost management led to 8% higher operating income and the operating income margin improved by 50 bps to 8.0% compared to Q2 2007.

Revenues in Italy declined by 1% in Q2 2008, while operating income was up strongly by 12% leading to an 80 bps increase in the operating income margin to 7.7%. In Iberia, revenues were down 2% compared to the same period last year, whereas the operating income margin improved by 100 bps to 6.7%. In the Nordics, revenues increased by 9% in constant currency, while revenues in the Benelux declined 2%. Emerging Markets revenues grew by 17% in constant currency.

BUSINESS LINE PERFORMANCE
(The pie charts are visable in the PDF version of the report)
Adecco grew revenues of the Office and Industrial businesses by 2% in constant currency to EUR 4.1 billion in Q2 2008 (-2% organically) and increased the underlying gross margin by 40 bps to 16.3%. The Industrial business increased revenues by 3% in constant currency (-2% organically). Revenues in Germany were up 3% organically, France declined by 1%, Italy by 2%, and the USA & Canada decreased 13% in constant currency. In the Office business, revenues declined by 2% in constant currency with low single digit growth in Japan and the Nordics and flat revenue development in France, while revenues declined in the UK & Ireland and in the USA & Canada.

In the second quarter of 2008, revenues in the Professional Business[4] declined by 2% in constant currency (-2% organically). The underlying gross margin in the Professional Business improved by 160 bps to 28.0%, mainly driven by Human Capital Solutions, the Engineering & Technical and the Information Technology businesses.

In Information Technology (IT), Adecco's revenues decreased 10% in constant currency. Continued customer portfolio optimization led to a revenue decline in constant currency of 22% in the UK & Ireland, and a decline of 3% in the USA & Canada when compared to the same quarter last year.

Adecco's Engineering & Technical (E&T) business was flat in constant currency. In USA & Canada, Adecco maintained the same revenue level as in the prior year, while revenues in the UK & Ireland declined by 23%, both in constant currency. Strong demand in Germany led to 19% revenue growth.

In Finance & Legal (F&L), Adecco increased revenues by 2% in constant currency in the second quarter of 2008. Declining business in USA & Canada was more than offset by good demand in continental Europe.

In the second quarter of 2008 revenues in Sales, Marketing & Events (SM&E) remained flat on a constant currency basis, whereas Medical & Science (M&S) grew 18%. Revenues in Human Capital Solutions (HCS) increased 12% in constant currency.

MANAGEMENT OUTLOOK
Management remains focused on value based management especially during current, economically more difficult times. Through stringent cost control and the focus on professional and specialized business fields, Adecco is well positioned and can exploit external opportunities to enhance its leadership position in the global staffing market.

For the remainder of the year, Adecco anticipates continued weak markets in the USA & Canada, while in Europe and in Japan a further market deceleration is anticipated. Given weaker demand, due to the softening economic environment, the focus on aligning the cost base with revenue developments is at the forefront of management's priorities. The company remains fully committed to reach an EBITA margin in excess of 5.0% in 2009. With further weakening of the economic environment this target becomes increasingly ambitious.

Adecco's Board of Directors has decided to repurchase up to an additional 2% of the Company's issued shares until the end of 2008, which is equivalent to approximately EUR 120 million at the current share price level. The shares are intended to be used for future acquisitions or to minimize potential dilution related to the outstanding convertible bond.

Financial Agenda 2008/2009
Q3 2008 results
November 4, 2008
Q4 & FY 2008 results
March 4, 2009
Q1 2009 results
May 6, 2009
AGM
May 13, 2009