The Adecco Group; Head of Investor Relations
Denis MachuelThe Adecco Group; Chief Executive Officer
The Adecco Group; Chief Financial Officer
PARTICIPANTS: Andrew GroblerBNP Paribas; Analyst James Rowland Clark Barclays; Analyst Suhasini Varanasi Goldman Sachs; Analyst Simon Lechipre Jefferies; Analyst
Remi GrenuMorgan Stanley; Analyst Simon Van Oppen Kepler Cheuvreux; Analyst Gian Marco Werro ZKB; Analyst
Karine EliasBarclays; Analyst
Benita BarrettoThe Adecco Group; Head of Investor Relations
Good morning. Thank you for joining the Adecco Group's conference call today.
I'm Benita Barretto, the Group's Head of Investor Relations. And with me are the Adecco Group's CEO, Denis Machuel, and CFO, Valentina Ficaio.
Before we begin, please take note of the disclaimer on Slide 2. Today's presentation will reference both GAAP and non-GAAP financial results and operating metrics. This conference call will include forward-looking statements which are based on current assumptions and, as always, present opportunities as well as risks and uncertainties.
With that, I will now hand over to Denis.
Denis MachuelThe Adecco Group; Chief Executive Officer
Thank you, Benita, and a warm welcome to all of you who have joined the call today. Let me open with the full-year highlights on slide four.
The Group has consistently delivered on its ambitions and targets in 2025. In terms of market share, the Group gained 245 basis points relative to key competitors, with ongoing positive momentum.
On a full-year basis, the Group's revenues were up 1.3 percent year-on-year. Gross profit was stable, and the Group delivered an industry-leading 19.2 percent gross margin, evidence of the benefits of its diversification strategy.
The Group has managed costs and capacity with discipline. G&A overheads were further reduced by 23 million euros, bringing our total net savings to nearly 200 million euros when compared to 2022's baseline. And productivity increased 3 percent year-on-year. In turn, the Group generated 693 million euros of EBITA and stayed within the EBITA margin corridor on a full year basis at 3 percent.
Cash generation was strong, with a 102 percent cash conversion ratio, operating cash flow of 613 million euros, and free cash flow of 483 million euros.
Importantly, the Group improved its leverage ratio, ending the year at 2.4 times net debt to EBITDA, down 0.2 times year-on-year and down 0.6 times sequentially.
Let's turn to slide 5.
On the left side, we highlight our consistent outperformance relative to key competitors across the past three years.
And the chart on the right-side shows volumes steadily improved throughout the year, with flexible placement and outsourcing volumes in the Adecco GBU rebounding from decline to growth.
Management's focus on customer satisfaction, digital innovation, and recruiter productivity, integral to our strategy, is driving strong top-line and volume momentum ahead of market trends.
Let's move to Slide 6, where we set out the progress we are making with the run-and-change agenda, strengthening execution muscle across operations day by day while investing in digital solutions and new services to drive future growth.
There are many points on this slide, so let me highlight only a few.
Beginning with the Strengthen Run priorities, the Group made significant progress in 2025. The Adecco North American turnaround gained traction; full-year revenues were up 12 percent, and the EBITA margin expanded 230 basis points year-on-year.
In line with the Group's digital strategy, Adecco further expanded its Talent Supply Chain approach to 144 large clients, adding 42 in Q4 alone. By centralizing, automating, and digitizing processes effectively, the Talent Supply Chain delivered a meaningful 550 basis points year-on-year improvement in fill rates.
In Akkodis, restructuring in Germany has locked in 58 million euros run-rate savings.
And LHH's Career Transition business continued to successfully expand in the SME segment, increasing the number of companies served by 17 percent.
The Group's Change agenda also progressed. Adecco now has six AI "recruiter" agents live within the Talent Supply Chain structure in the UK and France. The UK agents have achieved approximately 15 percent time savings in recruiting processes, an encouraging start. And we will roll-out agents across key markets in 2026 to scale these benefits.
While there is further work to be done in Akkodis Consulting, France's value creation plan improved performance, with the unit growing ahead of market and achieving a 7 percent margin run-rate, up 160 basis points year-on-year.
And in LHH, targeted investment in Ezra's digital coaching platform drove 42 percent revenue growth and a record pipeline at year end.
Moving to Slide 7. On this slide, we detail the firm progress made in the turnaround of Akkodis Germany.
Management took decisive restructuring action in 2025, achieving 58 million euros in annualized cost savings on a run-rate basis by year end. This included reducing the cost of sales by 43 million euros and SG&A expenses by 15 million euros, with 8 million euros saved through real estate consolidation across 26 locations.
The last wave of a right-sizing effort, lowering headcount by approximately 600 in total, is in flight. In addition, select non-core assets were exited, eliminating approximately 3 million euros of negative EBITA.
The program incurred one-time charges of 46 million euros in 2025 but has already delivered around 15 million euros of in-year P&L benefit. As a result, Akkodis Germany achieved a healthy 5.4 percent EBITA margin run-rate at year-end.
The Group expects incremental savings to crystallize in the P&L during 2026, in particular during H1. With the organization being right-sized, management's focus in 2026 will shift to rebuilding the top line, supported by encouraging new client wins across sectors such as aerospace, defense, and life sciences.
In short, the Group has made strong progress in stabilizing Akkodis Germany, positioning it for sustainable, profitable growth going forward.
Slide 8 sets out the Board of Directors' dividend proposal. We are retaining our attractive shareholder remuneration, with a dividend of one Swiss franc per share for fiscal year 2025. This represents a 46 percent payout ratio, in line with our established dividend policy of paying out 40 to 50 percent of adjusted earnings per share.
Shareholders will have the option to receive the dividend either in cash, or in newly issued shares. With this proposal, the Group provides attractive returns to shareholders, including the option for qualifying shareholders to participate in the Group's future growth in a tax-efficient way.
The optional scrip dividend aligns with and supports the Group's capital allocation priorities, which remain unchanged. It allows shareholders to increase their investment in the Adecco Group, while enabling the company to retain cash for growth and prioritize deleveraging.
Now, let me hand over to Valentina for the Q4 results.
Valentina FicaioThe Adecco Group; Chief Financial Officer
Thank you, Denis, and a warm welcome from my side.
Let's begin with slide 10 and an overview of the Group's strong Q4 results.
The Group delivered further significant market share gains, leading key competitors by 395 basis points.
Revenues reached 6 billion euros, rising 3.9 percent, our best quarterly performance this year. Gross profit grew 4 percent to 1.1 billion euros, with a healthy 19.1 percent margin, stable on an organic basis.
Our disciplined execution drove good operating leverage. We were pleased to see a strong productivity improvement of 11 percent, and to deliver a strong drop-down ratio of over 80 percent.
In turn, the Group's EBITA was 225 million euros, up 20 percent, with a 3.8 percent margin, up 60 basis points.
Let's now discuss GBU developments, beginning with Adecco on slide 11.
Adecco delivered a strong performance, with revenues at 4.8 billion euros, up 4.9 percent and improved sequentially.
Flexible placement revenues increased by 4 percent. Outsourcing was very strong, up 14 percent, and MSP was up 6 percent. Permanent placement, however, was 6 percent lower.
Adecco's healthy gross margin was driven by firm pricing, client mix, and lower permanent placement volumes. Productivity improved 6 percent.
The EBITA margin improved 40 basis points to 4 percent, mainly reflecting higher volumes and strong operating leverage, supported by G&A savings and agile capacity management. Adecco's drop-down ratio this quarter was robust, at over 50 percent.
Let's now move to Adecco at the segment level on slide 12.
In Adecco France, revenues were 2 percent lower; stable sequentially, and ahead of the market. Logistics continued to weigh, while autos and manufacturing were strong. The EBITA margin of 4.4 percent, up 10 basis points, mainly reflects client mix and benefit from SG&A savings plans.
Revenues in Adecco EMEA, excluding France, were up 4 percent and sequentially improved. Most territories achieved good growth and outperformed competitors. Looking at the larger markets:
Revenues were up 3 percent in Italy, with solid activity in logistics, financial services and consumer goods. Revenues in Iberia were up 7 percent. Food & beverage, autos and financial services were strong.
In the UK & Ireland, revenues declined 1 percent, a good result in a challenging market. The result was weighed by lower logistics and public sector demand, despite strength in IT tech and financial services.
Revenues in Germany & Austria were up 2 percent, well ahead of competitors, with strength in autos, consumer goods, and defense.
The segment's EBITA margin of 3.9 percent was 50 basis points higher, mainly reflecting strong operating leverage and good cost mitigation.
Turning now to slide 13. Adecco Americas delivered 21 percent revenue growth.
North America revenues increased 23 percent, well ahead of the market, mainly due to strong activity from large clients. In sector terms, consumer goods, food & beverage, and autos were notably strong.
Latin America revenues were up 19 percent, led by Colombia, Peru, and Brazil. By sector, logistics, financial & professional services, and retail were strong.
The Americas' EBITA margin of 3.3 percent expanded 150 basis points, reflecting client mix and strong operating leverage from higher volumes.
Adecco APAC remained strong, with revenues up 7 percent. Revenues rose 6 percent in Japan, 14 percent in Asia, and 7 percent in India. Australia & New Zealand returned to growth, with revenues up 2 percent.
APAC's EBITA margin of 4.3 percent mainly reflects the timing of income from FESCO. Let's now focus on slide 14, and Akkodis' strengthened performance.
Akkodis' revenues were 1 percent lower and sequentially improved. Consulting & Solutions revenues were up 2 percent, marking a return to growth for this service line. In EMEA, revenues were flat. Germany was 7 percent lower, driven by autos headwinds. However, revenues in France were up 3 percent and ahead of the market, driven by strength in aerospace & defense and autos, and the UK and Italy performed notably well.
North American revenues were up 3 percent, ahead of market, supported by further modest improvement in tech staffing demand. Consulting & Solutions grew 46 percent. Revenues in APAC were 4 percent lower. Japan's result was heavily influenced by trading day differences; on an adjusted basis, revenues were up 5 percent. Revenues in Australia were 10 percent lower in a tough market.
Akkodis' EBITA margin of 7 percent was 90 basis points higher, mainly reflecting benefit from the turnaround in Germany.
Let's move to slide 15.
LHH has executed well and delivered highly profitable growth. LHH's revenues were up 2 percent.
In Professional Recruitment Solutions, revenues were 3 percent lower, taking share in a subdued market. Recruitment Solution's gross profit was flat, with the US 3 percent lower and Rest of World up 4 percent. Permanent placement was up 4 percent and productivity was 8 percent higher.
Career Transition was robust, with revenues up 1 percent. US revenues were 2 percent lower on a high comparison, while the UK and Switzerland were strong. The pipeline remains healthy.
Revenues in Coaching & Skilling rose 27 percent. Ezra's revenues were very strong, rising 68 percent, while General Assembly's B2B business grew 31 percent.
LHH's EBITA margin was 9.7 percent, up 510 basis points. The year-on-year development is flattered by the absence of charges recorded in Q4 24 related to the wind-down of
General Assembly's B2C activities. On an underlying basis, the margin expanded 230 basis points, reflecting positive mix and volumes and strong operating leverage, with productivity up 12 percent.
Let's now turn to slide 16.
Gross margin was healthy at 19.1 percent, stable year-on-year on an organic basis. The Group's gross margin was driven by:
A negative FX impact of 10 basis points,
A 20 basis points negative impact from flexible placement, mainly reflecting client and country mix,
A 10 basis points negative impact from permanent placement, reflecting lower activity in Adecco,
And, a 30 basis points positive impact in outsourcing, consulting, and other services, mainly driven by Akkodis Germany.
Let's look at slide 17 and the Group's EBITA bridge.
At 3.8 percent, the EBITA margin excluding one-offs was strong, rising 60 basis points year-on-year. The result was driven by:
A 10 basis points negative impact from FX.
A 30 basis points favorable impact from Akkodis Germany. And furthermore, excluding Akkodis Germany.
A stable gross profit contribution
An encouraging 50 basis points positive impact from operating leverage, including G&A savings as well as strong productivity improvement;
And a 10 basis points negative impact from the timing of FESCO income.
Among key metrics, SG&A expenses excluding one-offs as a percentage of revenues was
15.4 percent, down 70 basis points, while G&A costs were just 3 percent of revenues. Productivity, measured as direct contribution per selling FTE, rose 11 percent.
Moving to slide 18, and the Group's cash flow and financing structure.
The last 12-month cash conversion ratio was strong at 102 percent. Full-year operating free cash flow was 613 million euros, and free cash flow was 483 million euros. Both outcomes are strong given the Group's continuous improvement in revenues.
In Q4, operating cash flow was 476 million euros, a modest 15 million euros decrease from the prior-year period. This outcome reflects strong collections and favorable timing of payables, partly mitigated by working capital absorption for growth. We have maintained discipline regarding payment terms and are pleased to report that the Group's DSO improved 0.4 days to 51.8 days, remaining best-in-class.
Capital expenditure was 50 million euros, and free cash flow was 426 million euros, a modest 20 million euros decrease from the prior-year period.
The Group also strengthened its balance sheet. Gross debts were reduced by 280 million euros in 2025, supported by the repayment of a 225 million Swiss franc senior bond in Q4. At the end of Q4, net debt was 2.29 billion euros, 186 million euros lower.
The leverage ratio improved to 2.4 times, down 0.2 times year-on-year and 0.6 times sequentially. The Group is firmly committed to bringing the net debt to EBITDA ratio to
1.5 times or below by the end of 2027, absent any major macroeconomic or geopolitical disruption.
On slide 19 we provide our near-term outlook.
The Group has seen continued positive momentum in volumes this quarter to date.
For Q1, the Group expects gross margin and SG&A expenses, excluding one-offs, to be broadly stable sequentially.
As a reminder, the prior-year period benefited from the timing of FESCO income.
We are rigorously executing the Group's strategy and run-and-change priorities, focusing on market share gains while managing costs and capacity with discipline to drive profitable growth.
And with that, I'll hand back to Denis.
Denis MachuelThe Adecco Group; Chief Executive Officer
Thank you, Valentina. And let me conclude with Slide 20 and key takeaways.
We launched the agility advantage value creation path and run and change agenda at our November Capital Markets Day.
We are successfully executing against group strategy and driving momentum. During 2025, the group delivered on its full year margin commitment, captured market share and return to revenue growth. And we are encouraged to see continued positive momentum in volumes to date this quarter.
Moreover, as we successfully advanced our strategic priorities, the group's financials are improving, underpinning an improvement in the year-end net debt-to-EBITDA ratio which was down 0.2x year-on-year and 0.6x sequentially.
We remain firmly committed to achieving a net debt-to-EBITDA ratio at or below 1x by year-end 2027.
With this said, thank you for your attention, and let's open the lines for Q&A.
Andrew GroblerBNP Paribas; Analyst
Just a couple from me, if I may.
Firstly, just on free cash flow. It was very strong in Q4 led by payables. Could you just talk through what you did to drive that and whether any of that is going to reverse into early 2026?
And then secondly, just a slightly broader one around client behavior. Are you seeing any change in client behavior in terms of their desire for flexibility, in terms of the interactions they're having with you? Or do they remain broadly pretty cautious in those end markets?
Denis MachuelThe Adecco Group; Chief Executive Officer
Thank you, Andy. Valentina is going to answer the first part, and I'm going to answer your second question.
Valentina FicaioThe Adecco Group; Chief Financial Officer
Andy, on free cash flow, it was a very strong performance. You've seen that we landed on 483 million euros and the conversion ratio was very strong, above 100 percent. And it's particularly strong, if we consider that we've done it at the back of the year; most importantly in Q4, when we were growing. You know that our business absorbs working capital when we grow at this level.
If I try to unpack a bit the most important components, fundamentally, it all goes down to very strong working capital management.
We've been very diligent on collections. You've seen how our DSO continues to be very strong, down year-on-year. It's not easy to keep going down year-on-year in this market, so we're very pleased with that.
And in terms of account payables, yes, we did have some favorable timing on payments, but we've also done quite a lot of work in terms of carving out overbalancing and negotiating payment terms. You really start to see how the impact of that comes through also in our AP management.
So overall, we are very pleased and we continue to be laser-focused on working capital.
When you think about 2026, I really think that free cash flow generation this year will be similar. Just as a reminder, seasonally, our H1 is an outflow versus an H2 that is an inflow. So that's the way that I would model it.
But again, laser-focused on working capital because that's the key to our strong free cash flow performance this quarter.
Denis MachuelThe Adecco Group; Chief Executive Officer
And as far as what our clients are telling us, we see pretty good momentum particularly on flex. I must say, Adecco is firing on almost all cylinders. We have soft results in France and the U.K., even though in France, we are ahead of the market. But apart from that, we're really, really strong. And we see momentum, we see demand for flexible workers across the board, across geographies.
It says something also about, of course, the uncertainty that we live in. But the economy is pretty good. There's demand, there's work to be done, and we are surfing on that.
We're surfing on that through, of course, our sales dynamism. We serve because we are a very strong delivery engine, and that makes me very confident.
There's one sign which is interesting. We see a little bit of a pickup in permanent recruitment in LHH. It's 4 percent, not big yet, and we start from the old volumes; but it's a little bit positive. Overall, I'm very, very optimistic about the momentum that we have.
We have a great momentum as well in outsourcing, you've seen the double-digit growth. I think the market is there to support our development.
Andrew GroblerBNP Paribas; Analyst
Can I just ask one quick follow-up, just on LHH and in RS in particular? You noted that perm was growing, but gross profit was down in that segment. So that suggests that your gross margin in your contract temp business is lower. Could you just talk through what's going on in that segment, please?
Denis MachuelThe Adecco Group; Chief Executive Officer
Actually, you can look at LHH in two dimensions. There is perm and flex on one side, and there is the U.S. and outside of the U.S.
In the U.S., we are minus 3 percent. In the rest of the world, we are plus 4 percent overall. So that says something about the geographic differences. Overall, let's be clear, the whole industry is operating at pretty low historical level. But we are outperforming the market, which that's what matters to me.
Valentina FicaioThe Adecco Group; Chief Financial Officer
And I would also add that, as you look overall at the performance, you see also how LHH has really worked on productivity to offset some of these elements. And LHH productivity was up 12 percent in Q4, and their sales FTE were down 4 percent. So, you see how they are acting also on what Denis just mentioned.
James Rowland ClarkBarclays; Analyst
My first question is just on the answer you just gave about good momentum. Just to be clear, I understand you've taken a lot of market share in the last few quarters. Is that momentum comment about you specifically taking share? Or do you think that's more market-based? If you could help sort of parse those two elements, that would be great.
Secondly, on EBITA margins in 2026, I think consensus has got 30 to 40 bps of margin growth. Are you comfortable with that? And could you help us bridge that improvement across organic gross margin which looks to be under pressure going into this year, but also then offset by SG&A? So I'd love just to get your sense on the moving parts to achieve that margin, if you're comfortable with it.
And then finally, on leverage, you're guiding to down to 2.5x by 2027. So you've got to lose 0.5x a year between now and then. Do you see that as a linear progression or faster in 2026 and 2027 or vice versa? And if so, why?
Denis MachuelThe Adecco Group; Chief Executive Officer
Thank you, James. And I'm sure Valentina will be super happy to take the EBITA and leverage questions, and I'm going to talk about the momentum.
Two things here. I believe in the way we operate, the way we've put in place a very strong sales dynamic, which we adjust as per market conditions, industry, and geographies. We have also put a very strong delivery engine that helps us gain share from our own merits, and that makes me very confident for the future. I also believe that, overall, the market conditions are also improving.
And we have been through some difficult quarters at the end of 2024 and beginning of 2025. Now we see an overall better traction on the markets. And on that, we are well positioned because we've done all the hard work to strengthen the muscle in sales, strengthen the muscle in delivery.
So, I would say it's a bit of both help us grow as we do. Vale, now on EBITA?
Valentina FicaioThe Adecco Group; Chief Financial Officer
And I'll build on the comments Denis just mentioned about momentum just to give you some more flavor on guidance for Q1 EBITA.
I think that what you mentioned, James, is reasonable. The way that I think about our Q1 EBITA is the continued positive volume behavior, which gives us confidence in terms of revenue outlook. Gross margin is broadly stable sequentially.
If you think also about the comparison year-on-year, we have a 20 basis point headwind coming from FX. You may remember that last year in Q1 2025, this represented a tailwind. So that gives you a flavor why also year-on-year, Q1 gross margin is actually broadly stable.
And in terms of SG&A, our normal seasonality from Q4 to Q1 usually see SG&A going up by 10 million euros, 15 million euros.
So the fact that we're guiding for broadly stable tells you about the cost discipline that we continue to enforce. You saw that we've mentioned the FESCO income, because we
assume FESCO will continue to contribute positively on a full year basis. But the timing can vary. And last year, it happened in Q1.
On a full-year EBITA, we don't guide overall. But I think this gives you a bit the moving pieces that you need to model in terms of getting there, and the new assumption that you mentioned are quite reasonable.
Moving to leverage. I think the free cash flow generation, the trajectory of the performance that we had throughout 2025, delivered good delivering, 0.2 times year-on-year and sequentially, 0.6 times. The path to 1.5 is clear.
We don't guide specifically on 2026 and 2027. But clearly, we have the levers in our hands, and we are already pulling modest growth. You've seen how growth has dropped through in operating leverage over the past quarters. We expect that to continue throughout the next quarters.
We have additional benefits coming from Akkodis Germany, but also other elements like the turnaround in North America and the improvement in France, that will continue to help us get there, as we've shown you in the recent quarters.
Suhasini VaranasiGoldman Sachs; Analyst
Just one question for me, please. I just wanted to clarify the exit rate and momentum that you saw year-to-date because I think your slide on Slide 5 seems to suggest at least on the GBU, Adecco GBU front, the momentum is continuing to improve in year-to-date. Just at that GBU level and at the group level, can you please clarify how the exit rate has looked compared to the 3.94 percent growth that you reported last quarter.
Valentina FicaioThe Adecco Group; Chief Financial Officer
Suhasini, I'll take this one.
Just to give you a sense, the exit rate was very much aligned with the cost leverage, at group level. I hope that's helpful in giving you a sense.
Simon LechipreJefferies; Analyst
First question. Looking at your Q4 results and if we exclude Akkodis, gross margin was down 30 bps on an organic basis and SG&A was probably flat organically. In prior quarters, it seems you were able to offset the gross margin pressure through cost savings. So does that mean it is no longer the case? And how should we think about the future quarters in terms of the relation between margin performance and SG&A?
Secondly, in terms of your Q1 gross margin guidance, so stable sequentially. I would assume the seasonal effect from Q4 to Q1 is negative. It seems you're also talking about FX negative impact being a bit stronger. So how would you offset these two factors to get to a stable gross margin sequentially?
And lastly on AI. We see more and more evidences of how AI can make the business more efficient. So I would assume this suggests some deflationary effect on top line? How do you think about the net bottom line impact in the future? Do you think your SG&A would continue to reduce? And would that be enough to offset this financial deflationary trend on the top line?
Denis MachuelThe Adecco Group; Chief Executive Officer
I'll take the AI piece, and Valentina will be very happy to take the gross margin question and the FX.
Valentina FicaioThe Adecco Group; Chief Financial Officer
So starting with your two questions on gross margin, Simon.
When you think about the performance that we had in Q4 at 19.1 percent, it's a very healthy level, industry leading. And it reflects a number of components.
It's not just Akkodis, right? There's firm pricing and client mix and there's GBUs mix that contribute positively to the gross margin build-up.
Yes, Akkodis Germany is a component of it but it's not the only one. There's clear added value in the gross margin that comes from the service lines that have higher gross margin profile, like outsourcing and EZRA. You've heard us mentioning a number of service lines that have grown double digit in Q4, and we'll continue to do that.
So there are a number of levers that we can continue to work on. Akkodis Germany is one of them, to work on our gross margin and keep it at this stable levels.
By the way, Permanent Placement continues to be subdued clearly. When Permanent Placement picks up, it is a further lever that we can capture.
When you think about Q1, let me just take a moment to walk you through the elements.
You've called out FX, that's correct. As I was mentioning before, actually, that was a tailwind in Q1 last year. So you do have a 20 basis points gap when you look at it from a Q-on-Q perspective.
And then again, we have several pieces because there's modest impact coming from perm and flex, but there's also a modest positive impact coming from the other service lines. So that is why we continue to say it's really broadly stable even on a year-on-year basis.
Because if you take out the FX, we are continuing to see the benefits of the other service lines, in Akkodis for example, that we are implementing. This is affecting the modest client mix that we have in flex and perm.
Simon LechipreJefferies; Analyst
Sorry, may I have just a quick follow-up on GM and also on SG&A. So it was minus 1 percent organically year-on-year in Q4, so mainly driven by Akkodis. So does that mean like the Adecco GBU, as you know is now trending kind of flattish year-on-year?
Valentina FicaioThe Adecco Group; Chief Financial Officer
No, we continue to see the same performance. We called out Akkodis when we mentioned that because we want to call out the nice progress that we've done in the restructuring and the fact that most of it is coming through SG&A.
You've seen it also in our productivity numbers. They're up in all of the GBUs, not just in Akkodis; and in our G&A over sales, that is just 3 percent. That is not just Akkodis, it's broad-based.
Denis MachuelThe Adecco Group; Chief Executive Officer
Let me take now the AI impact. I think there is a top line positive impact, and also an impact in productivity that's going to help our profitability overall.
On the top line, I believe that AI is really an opportunity for us. Remind you, we are in a fragmented market. So the more optimized we are in how we deliver our service through AI, the better we can gain share. And I'll give you two examples.
We've embedded generative AI into our Career Studio in LHH. And when people use Career Studio with AI powered, they find a job 32 days earlier than the ones who don't. This is creating value for our clients. This has helped us penetrate bigger, faster. This has a positive impact on the top line.
If I look at the way we deliver with our AI agents in the U.K. on recruitment, we have fill rates that have improved 550 basis points, okay? So this is an impact.
We have improved our time to submit by 24 percent quarter-on-quarter. This helps us to be more efficient, but even more so, this has a positive impact on the top line. And in doing so, we have operating leverage, as Valentina will say.
And in terms of how we optimize our cost, of course, we will progressively embed AI into our processes. We embed AI in our middle and back office, this is also going to create efficiencies.
So I believe that AI will have a positive impact both on the way we capture market share and in the way we improve our profitability.
Remi GrenuMorgan Stanley; Analyst
Denis, Valentina, just one question remaining on my side. Focusing a little bit on North America and the very high growth there. The acceleration came in Q1 and Q2 last year, if I remember correctly. So can you help us unpack a little bit the performance there, if it's been driven by a few contracts and if we then should expect some kind of annualization of these benefits in Q1 and Q2 this year?
Just trying to understand a little bit from the 20 percent organic growth you're currently growing out in that country, what we should expect in terms of potential normalization over the next few quarters.
Denis MachuelThe Adecco Group; Chief Executive Officer
Thank you, Remi. If I go back to history, Q1 we were minus 1 percent year-on-year. Q2 we are plus 10 percent. Q3 we are plus 21 percent, and Q4, we are plus 23 percent. Of course, we're very pleased. This shows that all the effort that we've put in the turnaround plan in the U.S. is delivering.
We have improved productivity by 10 percent and we have a very strong dynamic on the large accounts. We also are positive in the SMEs, but that's where we need to focus our efforts, because the growth in our large accounts is a bit higher than the growth on small and medium companies.
To your point, let's be clear, we started from a low base, okay? These double-digit growth rates are encouraging; but as we anniversary some of the wins of the large clients, we will go more towards more market trends normalization.
Still our focus and our efforts will be to gain share, to be ahead of the market. I'm quite positive that we can achieve that, but probably not to the extent that we've had this
year. We have good traction in customer goods, in retail, in autos, in food and beverages. There is traction in the market, and the economy in the U.S. is still pretty good.
We will serve on that. We are much stronger than we were two years ago. And yes, you can expect growth probably not with such a differential with the market.
Remi GrenuMorgan Stanley; Analyst
Understood, and just maybe building up a little bit on the question from Simon on the operating cost guidance for Q1. I'm a little bit surprised by the comment on stability, so can you help us a little bit quantify the building blocks to get there?
Discussing with some of your competitors, it feels like that they are forecasting some wage inflation around 2 percent or a little bit more than that. The higher volume of activity, the 4 percent organic growth, and positive momentum probably would mean under a normal cycle that you need to invest a little bit more in your resources. So can you help us clarify a little bit on that stability of operating costs?
And I'm just trying to understand, as well, to what extent you think stability comments and these cost efficiencies are already driven by AI initiatives; or if it's just about Adecco removing some of the inefficiencies in the cost base that you had there and had to address?
Denis MachuelThe Adecco Group; Chief Executive Officer
Let me start by a little bit of how we strategize that growth. You heard me say in the past that what we try is to be very, very granular in the way we inject the resources linked to the dynamic of the market.
And when I talk about markets, it's by country. It's even by region in a country, by industry in a particular region or a particular country. So really, we're adjusting through
this empowerment that we've put in place years ago. We adjust just very precisely to the market conditions.
Yes, we will need to invest in some places, but we are also cautious in some others and that's how we operate. Definitely, we have improved our cost inefficiencies. We've really readjusted our S piece, and have adjusted our G&A. So I think we are continuously optimizing the resources, and I think AI will nicely help us on that.
Now on the building blocks for Q1.
Valentina FicaioThe Adecco Group; Chief Financial Officer
Hello, Remi, from my side. Just to give additional color, on the operating cost sequentially stable. It's all about cost discipline, right? The continuous focus on productivity and G&A gets us there.
If you look for a second at Q4, I think it's also very helpful to see how we have performed. Productivity was up broad-based, plus 11 percent at group level. But if you look at each GBU, Adecco was plus 6, LHH was up 12 and Akkodis, even with Germany soft, capped 90 percent utilization rate approximately.
So if you look at our group employees, they are actually slightly down. So that tells you how we are combining very well growth with good cost discipline and good productivity. And that gives you a sense of why we guide for this to continue to be stable, as we continue building on these two clear levers. That has been key to the operating leverage that you've seen in our results.
Denis MachuelThe Adecco Group; Chief Executive Officer
And just to complement on AI. Yes, we see a 30 bps improvement when we serve the clients by AI initiatives. But it's not at the scale that I want to see.
We said that we would cover 60 percent of our revenues by agentic AI over time by the end of 2026. I mean it's progressing; we yet have to fully scale. So more to come, we'll keep you updated on the progress.
I remain prudent in the impact of AI because there is no magic in AI. It's hard work, you need to scale it. I think we have all the levers and the foundations, but let's see how it goes, but the trend is positive.
Remi GrenuMorgan Stanley; Analyst
OK, and the last question is on the SME which you referred to Denis. I think, in one of your previous answers, you said that you needed to address this segment better. Is the issue market related? Is just the momentum between the two markets, if you see separate them between SME and large enterprise, still very diverging a lot in terms of volume of activity? Or is there any initiative at Adecco's level which you need to implement to be better at serving this cohort of client? Because this has an implication, obviously for gross margin and profitability, I guess?
Denis MachuelThe Adecco Group; Chief Executive Officer
Well actually, yes. We've really doubled down in the past couple of years in how we serve the large clients, and hence, talent supply chain. We still have a pretty good dynamic in SMEs. But this is a place where we accelerate our efforts because we know, to your point, that it's very accretive to our margin.
So I think we are in a good place in how we roll out all our technology into our talent supply chain, and we are also rolling out progressively the technology through our branches.
I believe that the strength of best network is that proximity, that deep understanding of the local ecosystems. And that's one of the top priorities for 2026, to inject as much energy and technology into the SME segment as we have done in the large accounts.
Simon Van OppenKepler Cheuvreux; Analyst
I have a question on margins. We see margins in all divisions strengthening in Q4, most significantly in Adecco and LHH, especially on an underlying basis. Can you unpack a little bit the main drivers for the strengthening of your margins by division? And what do you expect in terms of margin for each division in 2026? And in extension to that, should we expect more one-offs in 2026? And if so, roughly by how much by division?
Valentina FicaioThe Adecco Group; Chief Financial Officer
Thank you, Simon. So let me explain a bit around each GBU and how they evolve in terms of margin, and then we can also quickly touch on formal one-offs guidance.
I think the common denominator among the three GBUs improvement is volumes up, already in average. That is clearly, and if I take for a moment Akkodis out, it's a clear denominator, right?
And then, if I take one GBU apart, you have Adecco that grew materially, right? You've seen how in Q4, it's up almost 5 percent with pockets that are even double digits. And clearly, the Adecco story is a story around strong operating leverage, but also diversification with service lines like outsourcing that grew double digits. And this always comes on the back of good cost discipline, healthy operating leverage and the improvement in margins.
In LHH, you've seen us mention that there's an element of the improvement year-on-year that is because we had headwinds last year. So it is a 500 basis point improvement, but in fact, underlying half of it, 250 which is still a very significant improvement. And it's mainly coming from CT continuing to perform very well, but also the contribution of other lines like EZRA and like the B2B business in GA that has grown double digits. They come with very healthy high gross margins.
And then finally in Akkodis, clearly, the main driver of the improvement in performance is a Akkodis Germany and the fact that we are progressing well in the turnaround.
In terms of one-off costs, the guidance that we're giving you is down from 60 million euros this year to 40 million euros next year. The 60 million euros clearly this year is mainly coming from the Akkodis Germany turnaround. And so we're basically guiding next year to be lower in one-offs, mainly because Akkodis Germany is basically completed.
Gian-Marco WerroZKB; Analyst
Just two questions from my side. The first one is on the gross profit margin in Flexible Placement. I would appreciate if you can dive a little bit deeper into this development of 20 basis point decline year-over-year.
Can you maybe elaborate on the gross margin dynamics in the temporary staffing, especially in your key markets like France, Germany and also the U.S., please, just to grab a little bit the dynamics, how it's evolving, still increasing, stable, declining?
And then second question is on AI also. Denis, I appreciate your optimistic tone about the opportunities lying in here. But very frankly speaking don't you also see, of course, some headwinds here of jobs that become redundant? Like many operations of warehouses, IT, white collar back-office work that, in my view, is certainly also affecting your top line? I would appreciate if you can just talk briefly about the dynamics that you observe in the industry.
Denis MachuelThe Adecco Group; Chief Executive Officer
I'm going to start by answering your questions on AI, Gian-Marco, and then Valentina will talk about the gross margin. Fundamentally, we don't see any impact of AI at this stage.
We know that as all technology evolutions that are happening, some jobs are going to be impacted, some destroyed, but so many are going to be created. That's what history tells us, okay?
And for the moment, if you look at the numbers coming from Career Transition, which is the world leader in our placement, 1.4 percent of the people are telling us that they've been laid off due to AI. That's it, okay? And 12 percent say, yes, there was a bit of AI coming in.
So, to date, there's no massive impact of AI. And let's be clear, and I'm not the only one saying that, a lot of companies are doing layoff plans pretending that is coming from AI because it makes them look good, okay? But fundamentally, this is not the case.
So now nobody knows, nobody knows within three or five years what's the relationship between the jobs destroyed and the jobs created, okay?
If you look back 10 years ago, nobody was talking about cloud architects, nobody was talking about content moderation. And these jobs have been created because of the digital world. So this is going to come as well with AI.
So I believe that because of this massive reshuffling of the labor market. This is a massive opportunity for us to upskill, reskill, move people around, accompanying people in their agility. That's what we are here for.
And AI is not new. AI has been now around for more than a couple of years. And look at our numbers, okay? We are trending nicely in this world of AI, we are reshaping the future of work in this AI era. We are well placed to accompany our clients on the agility that is necessary with AI, so that makes me very confident.
Now on the gross margin.
Valentina FicaioThe Adecco Group; Chief Financial Officer
The year-on-year development you were asking about Gian-Marco, on flex first of all, it's a modest impact.
Overall, the flex gross margin remains quite healthy. We are happy with pricing, it stays firm. We have a positive spread bill-to-pay rate, and so the modest impact that you see is fundamentally client and country mix.
And just to build on the question that you're asking about, what about countries, France, U.S.? It is really all about how do we grow, right? In some countries, but also in some industry, we may see one client segment growing faster than the other. It's the case right now as Denis was mentioning in France and North America.
But what is really important is that as that happens, we also operate on cost base, right? Because these are also clients that come with a lower cost to serve.
So the most important thing when we think about margin, yes, it's the gross margin, but it's also the mix that we have between SMEs and large and the drop-through on the overall margin.
Gian-Marco WerroZKB; Analyst
OK, but there are no specific comments you want to make here on the three countries I mentioned? On the development of their growth, if the margin is stable?
Denis MachuelThe Adecco Group; Chief Executive Officer
The trends in these three countries are aligned with the overall trend of the GBUs, yes.
Karine EliasBarclays; Analyst
I just had a quick one on the hybrid. I believe on your third quarter conference call you mentioned your attention to refinance, at the time, the hybrid. Just wondering whether that's still the case?
Valentina FicaioThe Adecco Group; Chief Financial Officer
Karine, yes, you're correct. We are refinancing the hybrid, in progress of doing that. We are constantly looking at the market to understand when the right moment is to execute, but you should expect that to be happening.
Andrew GroblerBNP Paribas; Analyst
Just one follow-up, if I may, on the dividend. You moved to the option of the scrip. What drove that decision? And to what extent is that part of the plan for getting to 1.5x leverage ratio by the end of next year?
Denis MachuelThe Adecco Group; Chief Executive Officer
Thanks, Andy. So let me put the overall perspective. The group has a very clear framework on capital allocation and a clear dividend policy. Every year, of course depending upon the results and the annual performance, the Board evaluates all options within that framework and within dividend policy to provide what the Board believes as the best outcome for shareholders.
And this year, the decision has been made to propose the choice between the payment in shares or payment in cash. We believe is the right balance between our deleveraging priority on one side, and also retaining cash for growth.
So we also felt that this is an optionality that is financially attractive for our qualifying shareholders on the tax side. So I think it's a pretty good decision for shareholders.
Valentina FicaioThe Adecco Group; Chief Financial Officer
As Denis mentioned, the scrip is an option, completely independent from the path that we've discussed to reach our 1.5x target leverage ratio. That path is based on performance, growth, operating leverage, the turnarounds that we're doing. The scrip is an option and it's independent from that.
Denis MachuelThe Adecco Group; Chief Executive Officer
Thank you very much, everyone. We really appreciate your presence today.
So just to wrap up, our 2025 results make me very confident for the future. I must tell you that our teams are energized and they are focused on delivering performance.
So yes, we still have a lot to do. But the momentum that we've created and which continues at the beginning of 2026, as we said, puts us in a very good place to deliver profitable growth moving forward, and to delever.
Thanks a lot for having been with us today and speak to you next time. Have a great day, thank you.
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Adecco Group AG published this content on February 27, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on February 27, 2026 at 14:13 UTC.
