Adecco SA Aktie

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q1 2026 results. [Operator Instructions] I would now like to turn the call over to Benita Barretto, Head of Investor Relations and External Communications. Please go ahead.

Good morning, and 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 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.

Thank you, Benita, and a warm welcome to all of you who've joined the call today.

Let me begin with Slide 3. I'm really pleased to present Q1 results that show a very strong start of the year. Organic revenue growth has continued to accelerate. In the first quarter, revenues rose 5.3% year-on-year on an organic trading days adjusted basis, a strong result. The group made further strong market share gains, outperforming key competitors by 365 basis points, and we delivered a market-leading healthy 18.8% gross margin. The group EBITA, excluding one-offs, was 24% higher year-on-year on an organic constant currency basis. In turn, the EBITA margin expanded 20 basis points year-on-year to a robust 2.6%. Leverage was reduced 0.2x year-on-year, consistent with the ratio improvement delivered at the end of 2025, while the group's operating cash flow performance was solid, in line with normal seasonality and reflecting the business use of working capital during periods of rising revenue growth. Moreover, the group has continued to make swift progress with its AI agenda from which we are capturing encouraging productivity and growth.

Let's turn to Slide 4, which highlights how rigorous execution, including deploying AI tools and services is supporting the group's strong growth momentum. The left-hand side shows flexible placement and outsourcing volume data for the Adecco business. Against a mixed market backdrop, the Adecco Group has seen volumes recovering for over 12 months. In Q1, volumes further improved sequentially, achieving solid growth year-on-year and moving consistently higher than levels achieved in the first quarter 2 years ago.

Moving to the right side. Our talent supply chain solution delivered healthy operational results this quarter. Looking at performance for our largest clients, the temp placement fill rates improved by 400 basis points year-on-year with a 25% faster time to submit and a 30% reduction in time to fill. As the chart shows, against the backdrop of 20% higher demand from our largest clients, we are able to increase filled positions 25% year-on-year in Q1. This is a key part of how we gain market share.

So how did we achieve that? Well, actually, let's move to Slide 5, where we highlight how AI is driving productivity and growth across the group. We continue to scale a more efficient, integrated AI-driven platform model across the group. We have consolidated more than 30 Salesforce instances into a single AI-enabled digital platform with 27,000 recruiters now operating on a common tech stack and all recruiters equipped with GenAI capabilities. Automated order processing is up more than 65% year-on-year, year-to-date across 9 countries with plans to drive pace and efficiencies further. The group's Agentic AI rollout has accelerated with agents now added to Germany, Spain and selected global recruitment centers.

We will upgrade existing agents this year and deploy around 5 new agents. For example, we are currently piloting an onboarding agent in Spain, offering benefits such as instant automated candidate verification. We already see tangible operational benefits. More than 30,000 agent conversations are now held monthly, while over 110,000 candidate skills have been updated through agents, enriching our candidate database, which supports better search and matching.

To date, agents have delivered around 20% time savings for our recruiters. By the end of 2026, we expect 50% of Adecco revenues to be covered by Agentic AI. With these agents, we will be more efficient and more effective in delivery for our clients. And this, in turn, will help us grow faster.

Let me now hand over to Valentina to deep dive on our Q1 results.

Thank you, Denis, and good morning to all.

Let's begin with the GBU developments and Adecco on Slide 6, where we are pleased to report growth across all regions. Adecco grew revenues by 6.6%, further improved sequentially. In relative terms, Adecco captured 210 basis points of market share gain and all regions grew, underpinned by momentum in flexible placement, where revenues increased 6% and in outsourcing, which grew 16%. We believe both flex and outsourcing are benefiting from an uncertain geopolitical context as they are highly agile services, while permanent placement remained soft, declining 7% this quarter.

Adecco's gross profit improved with the margin mainly reflecting lower permanent placement volumes and the current client mix in flexible placement. EBITA rose 6% with a margin of 3%, mainly reflecting current business mix, largely offset through higher volumes, firm pricing and G&A savings benefit. Productivity rose 2% and selling FTEs were stable compared to the prior year period. Let's now move to Adecco at the segment level on Slide 7.

In Adecco France, revenues returned to growth, rising 1% and ahead of market. On-site activities grew double digits. And in sector terms, autos and manufacturing were strong, while health care was soft. The EBITA margin of 1.5% mainly reflects current business mix. Management is implementing a cost optimization plan, which delivered EUR 4 million run rate savings at the end of the first quarter. In Adecco EMEA, excluding France, revenue growth was strong, up 7%, and sequentially improved. Most territories delivered good performance and grew ahead of competitors. When we look at the larger markets, revenue rose 6% in Italy, supported by strong activity in logistics and solid demand in financial services, tech and autos.

Revenues in Iberia were up 16%, led by autos, financial services, food and beverage and consumer goods. DACH's revenues were stable, a good result given market headwinds. Growth was strong in aerospace and defense and autos, while logistics and public sector activity was soft. In the U.K. and Ireland, revenues were up 5% despite a tough market, supported by strong demand in financial services and the public sector. The segment's EBITA margin of 3% mainly reflects current business mix mitigated by higher volumes and G&A savings and productivity was up 7%.

Turning now to Slide 8. Adecco Americas delivered 15% revenue growth. North America continued to successfully execute its improvement plan. Revenues remained very strong, growing 15% and above market trends. In sector terms, consumer goods, food and beverage and autos performed well. Latin American revenues remained strong, rising 15%, led by Colombia, Peru and Brazil. By sector, logistics, financial services and retail were strong. The Americas EBITA margin of 1.7% mainly reflects higher volumes and G&A savings benefit, partly mitigated by investment in capacity to fuel growth and productivity was stable.

Turning to APAC. Revenues continued to advance strongly, growing 8% with growth across all territories. Revenues rose 6% in Japan, 12% in Asia, 10% in India and 3% in Australia and New Zealand. By sector, growth was led by consulting, aerospace and defense and public sector services. FESCO delivered EUR 20 million of income in the quarter, stable year-on-year. APAC's EBITA margin of 7.2% mainly reflects higher volumes and investment in capacity to drive future growth and productivity rose 2%.

Let's now move to Slide 9 and Akkodis. Top line developments are stabilizing. Revenues were 1% lower, with consulting up 0.4%, supported by a strong acceleration in aerospace and defense, which was 22% higher. In EMEA, revenues were 3% lower. Looking at the key countries, revenues in France were 2% higher and ahead of market with notable strength in aerospace and defense. However, Germany was 5% lower with headwinds in autos, partly offset by strong growth in aerospace and defense and manufacturing. North American revenues were up 5%, with tech staffing and consulting up 6% and 4%, respectively.

In APAC, revenues were 4% lower, weighed by Australia, where market conditions remain demanding. Japan was strong with revenues up 5%. Reflecting mainly the turnaround in Germany, Akkodis' profitability is improving. EBITA rose 23%, while the margin of 4.2% was 70 basis points higher, also reflecting good project margin developments and a strong utilization rate of 90%.

Let's now move to Slide 10 and LHH's good performance. LHH's revenues were down 1% this quarter. Revenues in career transition were up 5%. U.S. revenues were 4% higher, a strong result given a softer job cuts dynamic in this market. India, Spain and Switzerland performed well, and the business pipeline remains healthy. In Professional Recruitment Solutions, revenues were 6% lower, reflecting continued market headwinds in permanent placement. Recruitment Solutions gross profit was 8% lower, with the U.S. also 8% lower. Productivity rose 11% with billing FTEs down 13% due to further rightsizing efforts. In coaching and skilling, revenues rose 6%, led by Ezra, which grew revenues by 35%. LHH's EBITA was up 50%. We were pleased to see the business deliver a double-digit EBITA margin at 11%, reflecting positive business mix and strong cost mitigation.

Let's now turn to Slide 11 and the group's gross margin bridge. On a year-on-year basis, the group's 18.8% margin was driven by an unusually large FX headwind of 20 basis points, a 30 basis points impact from flexible placement, a 20 basis points impact from permanent placement and a 10 basis points positive impact in outsourcing, consulting and other services, mainly driven by Akkodis Germany. Overall, the result is healthy in the context of the current business mix, moving 40 basis points lower year-on-year on an organic basis.

Let's now look at Slide 12 and the group's EBITA bridge. The EBITA margin, excluding one-offs, was robust at 2.6%, up 20 basis points year-on-year and 40 basis points on a constant currency basis. The result was driven by a 20 basis points negative impact from FX, 10 basis points favorable impact from Akkodis Germany and 30 basis points favorable development from higher gross profits, excluding Akkodis Germany. Among key metrics, productivity is up 4% and G&A costs are at 3.2% of revenues, evidencing tight control over SG&A, which is stable year-on-year and 100 basis points lower as a percentage of revenues.

Moving to Slide 13 and the group's cash flow and financing structure. The last 12-month cash conversion ratio was strong at 94%. In Q1, we had an operating cash outflow of EUR 178 million, down EUR 34 million versus the prior year period. This cash result reflects good working capital management, working capital absorption for growth and normal seasonality. The group's DSO remains best-in-class at 53.3 days. Including capital expenditure of EUR 22 million, the free cash outflow was EUR 200 million. Alongside strong cash performance, the group is strengthening its financial structure.

The net debt-to-EBITDA ratio improved to 0.2x, consistent with year-end 2025 progress on deleveraging, affirming progress to meet our commitment to bring the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027, absent any major macroeconomic or geopolitical disruption. In April, the group successfully issued a EUR 450 million hybrid bond with an attractive coupon of 4.875%. The group has strong liquidity resources, including an undrawn EUR 750 million revolving credit facility and low interest expenses. It has fixed interest rates on 76% of its outstanding gross debt and no financial covenants on any of its outstanding debt.

With regards to the dividend, 53% of shareholders elected for the scrip, resulting in 5.3 million new shares issued at CHF 16.94 per share and CHF 79 million of cash distribution in Q2. We are pleased with the take-up of our scrip dividend and thank our shareholders for their continued partnership.

Moving on to Slide 14, where we provide our near-term outlook. The group has seen a continuation of the positive momentum in volumes to date this quarter. For Q2, the group expects gross margin to be marginally lower sequentially, reflecting normal seasonality. It expects SG&A expenses, excluding one-offs, to be marginally higher sequentially. We are rigorously executing the group strategy and run and change priorities, focusing on market share gains while managing costs and capacity with discipline to continue driving profitable growth.

And with that, I'll hand back to Denis.

Thank you, Valentina. And let's now turn to Slide 15.

Before I conclude, let me share an executive committee leadership change. Ranjit de Sousa has been appointed as President of LHH and member of the Group Executive Committee effective today. He will succeed Gaelle de la Fosse, who has decided to leave the company to pursue opportunities outside the group following a handover period. I'd like to sincerely and warmly thank Gaelle for her significant contribution over the past 4 years. Under her vision, LHH has been successfully repositioned into an end-to-end executive and professional talent solutions leader. And we are pleased to welcome Ranjit back to the Adecco Group to lead LHH. He is a highly effective leader who will build on the strong momentum of LHH, using his experience and track record to further drive innovation, leveraging human-centric AI and ensuring clients and candidates benefit from the full power of the Adecco Group's offering.

Moving to Slide 16. Let me conclude with our key takeaways. We have made a very strong start to 2026. We've delivered strong revenue growth and market share gains in the first quarter with AI deployment demonstrably driving competitive strength. The group's EBITA increased by 24%, a strong improvement that reflects disciplined strategic execution and rigorous cost management. Productivity was also up 4% year-on-year. The balance sheet has improved, and there is more to come. Deleveraging remains the clear priority for the group.

And with that, we'd like to thank you for your attention and open the lines for Q&A. So we are ready for the first questions.

[Operator Instructions] Your first question comes from the line of Suhasini Varanasi with Goldman Sachs.

Just one for me, please. I think on SG&A, maybe there was a little bit of a surprise to the upside on costs in first quarter and you're continuing to invest going into the next quarter. Can you maybe help us understand the dynamics behind this development here? Which are the regions that you're choosing to invest? And why -- what changed, I suppose, through the course of the quarter that made you want to invest a bit more?

I think Vale, who likes to control as much as I do, by the way, like to control the cost, will answer that question.

Thank you, Suhasini, for the question. I think what is clearly the takeaway is the revenue growth that we've seen stepping into Q1 '26 was very strong. And as always, we are very close to the behavior that each country shows, and we take deliberate choices to ensure that whenever we see growth, we capture it. So selectively, we have chosen to invest a bit more in S in some of these countries to ensure that we capture this growth, which, by the way, we've done successfully in Q1, and it was profitable growth, as you've seen how this improved our profit year-on-year.

And we see this momentum continuing. So it is very important that we remind ourselves that to make these deliberate choices is relevant also because we need to ensure that then we have the right capacity stepping into Q2 and more importantly, into H2, where volumes go up, trading days go up and then the opportunities of growth become even more important. So that's how we thought about it, and that's how you should think about us investing a bit more in S in these territories that are growing.

Yes. I just want to say we are also very focused on maintaining our G&A cost flat and at below 3.5% of revenue, we are laser-focused on that.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

A few questions on my side, if I may. So the first one is related to the previous question on SG&A. Maybe taking a little bit of a step back there. Denis, you were talking about AI implementation time, 20% time saved for recruiter, increasing productivity. So I guess one could have thought that this would translate into a higher drop-through or lower necessity to invest in cost when the volume is coming back. So I guess the question would be whether you think it's just a matter of time. It takes time for these initiatives to yield financial results. And if so, when would you expect to see the benefits materializing on the P&L? So that's the first question on AI and cost.

The second one is on the current momentum. So looking at the data published in March and April from the different providers, it feels a little bit and tell me if I'm wrong, that temp has continued to gradually improve. But perm has deteriorated a little bit once again and was weaker. So of course, different by countries, but are you seeing something which is consistent with that trend? And if so, would you say it's consistent with what's happening in the Middle East, higher uncertainty and clients moving toward flex placement?

And the last question is on Akkodis. I think Germany, as you were saying, was probably a little bit weaker. So any additional flavor you can give on that, whether you think it's a multi-quarter weakness we can expect? Is it the beginning of an inflection towards a little bit of a deterioration? And do you feel like at this point, you need to maybe adjust the size of the bench or take any significant actions?

Thank you, Remi. So I'm going to start with AI, and then I think Valentina will complement. But we're very optimistic about how we are scaling AI, but it's still in scaling mode, okay? What we see is productivity is coming in, okay? And that's going to be very promising in the future. It helps us gain market share. In terms of the cost, particularly when we scale Agentic AI, we signed a contract with Salesforce that gives us unlimited access to agents for a fixed price, which means whatever volume we put on top we don't have additional costs. So that's -- I think it's a pretty good thing. But maybe in terms of the dynamic of the drop-through, you want to say something, Valentina. And then I'm going to go on the market improvement and the other questions.

What I think is very important, building on what Denis just said is we're really driving the return on investments of these modest investments that we are doing in AI that, by the way, within the business, the usage we keep within the selling cost to ensure that accountability is driven and within the results that the leaders are delivering. What I think is really important, Remi, is on a year-on-year basis, revenues were up 5.3%. Our SG&A ratio over revenues is down 100 basis points. So that tells you that this revenue growth that we are generating with additional gross profit is dropping through.

And so the fact that on a year-on-year basis, our EBITA improves 24% organically is true profit generated, [indiscernible] flat year-on-year. So this is growth that is not just profitable, but driven by strong productivity, also thanks to AI, dropping 100% through with additional profit. This is important, and you have to look at it also on a year-on-year perspective.

Now on the trends. As we said, we have seen a positive trend on the volumes, on the flex volumes all through Q1, and it continues in Q2, which makes us very positive about the future. It's driven by probably the uncertainty -- the economy, which is not that bad and the uncertainty that favors more flexible placement than permanent placement. So you're right, permanent placement, I don't think it's deteriorating. It's just the same trend that we've seen, mostly linked to uncertainty where clients do not want to bet on recruiting permanently. It's true across many geographies.

However, if you think about 3 particular geographies, where we have a pretty nice momentum. In Adecco, Spain is growing 8% in permanent recruitment, and you know how good the economy is in Spain. In APAC, we are growing 10% in permanent recruitment in Adecco. In LHH, we are growing 19% in LatAm in permanent recruitment. We're growing 3% in Spain. The problem is the rest of the regions are probably more sensitive to macros. And yes, it's true that at the moment, it's really -- it's subdued. But let's be clear, we're still doing close to EUR 1 billion in permanent recruitment. So it's still a nice business, and it will remain quite dynamic. It will continue, albeit at lower levels. However, we're well positioned whenever the recovery comes. And we, of course, managing capacity. So this is -- but of course, macros today support Flex, and we are seeing continuous momentum on Flex volumes and also outsourcing, we mentioned 16% growth in outsourcing.

Now Germany, definitely, we have 2 sides of the coin. We have still pressure on autos, okay? Yes, we were expecting a little bit more dynamic. There's still pressure, and it's mainly coming from the German OEMs, and it is what it is.

However, on the other side, we have fantastic growth in aerospace and defense, 26%, with all the large clients that we have. We've seen growth in energy, growth in manufacturing. So -- I mean there is momentum here. However, of course, given the size of autos in Germany, it puts pressure on the overall results. Our margin is up 70% -- 70 basis points year-on-year. To your point, Remi, we are managing the bench. So we are adjusting. We are continuing to do savings. We see the top line stabilizing. I would not say fully stable yet, but stabilizing. And we are very actively saving costs. We've done 2 divestments, and we're managing the bench very, very actively. So I think on the midterm, I have a positive outlook on Germany. At the moment, it's still a bit under pressure.

Your next question comes from the line of Simon LeChipre with Jefferies.

I've got three, please. First of all, could you give us a bridge for the gross margin in Q2? And what is the degree of conservatism baked into this guidance given it has been a few quarters in a row now where GM came in weaker than expected?

And secondly, can you help us understand why gross margin would come down in Q2, while SG&A would go up?

And lastly, a follow-up on one of the previous questions. You are talking about profitable growth and the productivity gain from AI, but if we look at the gross margin of the temp business, it has been incrementally weaker over the past quarter. So does that mean that you are sharing most of the productivity gains with clients and then driving this deflationary trend?

Thanks, Simon. I'll take your first and second question, and then I'll hand over to Denis for the third one.

So looking at the outlook, first on gross margin, what we see and what you should model thinking about Q2 is marginally lower, in the region of 20 basis points, considering that FX will continue to be a headwind, albeit smaller than what you've seen in Q1, so more in the region of 10 basis points. You were asking why we have to think about this being lower. I think we also have to remember that Q2 in comparison to Q1, seasonally, we always see volumes in larger clients being a bit bigger. And there's also trading days that are actually lower. So these are the main elements that I would model.

Looking at SG&A, G&A tightly under control, well below 3.5%. We continue to capture pockets of efficiencies, but there's continuation. You have to think about our guidance in light of the strong momentum on growth that we continue to see. So we will continue to selectively invest in S to ensure that we capture that growth. H2 will be up in terms of trading days. We have to be prepared to capture that growth. But productivity will continue to be strong and up. So you should also model for our SG&A ratio over sales on a year-on-year perspective to perform well and down on a year-on-year basis.

So with regards to the productivity gains from AI, what we're doing is we are -- AI helps us really reduce our cost to serve with the large clients. And large clients are very competitive. So when you talk about the pressure on gross margin, there's a lot that's coming from the mix because we are growing very, very nicely in our large clients. And there's a bit of a difference with the growth on small and medium companies, which is a big focus now for sure. And of course, and driving better cost to serve to serve large clients is fundamental. So it's not that we are sharing productivity gains with clients. I mean the environment with the large ones is always very competitive.

So we are more and more scaling AI to improve our cost to serve, improve our productivity, and that's going to help us sustain our gross margin. But the thing is more the mix than what happens on the client side. The spread bill rate, pay rate is still positive. So it's a question of mix. And I'm very positive with the way we are scaling on the front line with our clients that delivers efficiency, that delivers value creation. We are able to go faster to deliver candidates to our clients. We have a better qualification. So we -- this is very promising as we move.

We will also deploy AI in the branches, in our network. It takes a bit more time than scaling AI in our global recruitment centers. But we are currently piloting AI in what we call branch of the future and getting all the learnings that we have from the large accounts in the smaller ones. And we'll keep you posted on that, but it's also promising.

Your next question comes from the line of Rory McKenzie with UBS.

It's Rory here. I just want to ask again about the gross margin because I think we're all still seeing it as a puzzle. If I look at the absolute organic growth in revenues and the absolute organic growth in gross profit that you report for the last 4 quarters, I calculate an incremental organic gross margin of 10%. Now that last 12 months is the period in which you have returned to growth. And so I guess, why shouldn't we think that, that 10% gross margin is representative of the average margin that you're able to win in this environment? What's going on within that, that explains why I'm only measuring a 10% margin?

Thanks, Rory. I'll try to unpack it a bit more for you. The reason why you see that difference is clearly coming from the mix. And when I talk about mix, it's on the one hand, client mix, yes, because the further growth that has accelerated even more in Q1 comes from larger clients, but it's also country mix. So you have seen that we have grown, in some cases, even double digits in countries that also mainly based on the fact that it's lower salaries on average terms. That also skews our gross margin overall a little bit down. However, that helps us on the SG&A ratio. And that is why you see such a strong performance also of the SG&A ratio year-over-year going down. So you have to look at those 2 in conjunction. If you look only at the gross profit in absolute terms growing, you see both of those impacts, client mix, but also the country mix.

No, that does actually [indiscernible] my second question. Again, you guess what I've been playing with this morning. But If I look at the organic growth in SG&A again over the last 4 quarters, I think I get to an organic incremental conversion ratio of 101% for the last 12 months, which obviously is great. But again, in some ways, looks perhaps unsustainable at that level to drop everything through to profits. So...

I think what you mean is that there are more levers, right? There are more levers that we are starting to pull and will come through more strongly over the next quarters because when I think about Akkodis Germany, not the vast majority has come in, more will come. There is further improvement in North America. There is a clear further improvement coming from France. So you have to expect improvement coming not just from this, and so the relationship between gross profit growing and how do we deal with us. But the other areas that we're working on to diversify, but also to improve and turn around some of the units.

Your next question comes from the line of Will Kirkness with Bernstein.

I've got two, please. So firstly, you mentioned bill rates and pay rate spreads still positive. I just wonder if you could talk about price versus volume, those components overall in the growth in temp and whether you're seeing wage inflation or conversations about wage inflation creeping back?

And then secondly, just looking at a couple of regions, and I guess sort of linking in with Rory's question to some degree. So in France, you've got growth coming through now, but margins down a bit. I guess you would expect that to sort of correct in the coming quarters. So just interested in the outlook there.

And then in Americas, I appreciate margins are up year-on-year, but you're seeing very good growth there. And there's been a number of years, I think, of self-help turnaround. So just wondering there why margins still sub-2% and where you would expect those to move to over the coming quarters?

I think Valentina will take the first one, and I'll take your second part.

Yes. Thanks, Will. So in terms of spread, you've heard already Denis mentioning that it continues to grow positively in terms of bill to pay rate. You were mentioning the behavior on wage inflation. What we see consistently now is a very modest wage inflation, and this is applicable both to what we see based on our cost base, but also in the market. So that's how you should model it moving forward. Very modest wage inflation, spread continues to be positive.

So as far as the 2 regions you're mentioning, France, we're pleased to be back to growth. We are at 1%. We are ahead of the market, which is good. We definitely -- we have -- and that's -- again, that's the mix that Valentina was talking about. We still have a better dynamic with large accounts than with small and medium enterprises, which, of course, again, weighs on the profitability. We have a strong plan to do several things. First of all, to reactivate strongly how we go to market with small and medium enterprises. That is underway.

We also want to scale up faster the talent supply chain model that helps us reduce our cost to serve so that the profitability with the large accounts is improving. We also have an SG&A program to make sure that we delivered EUR 4 million of cost optimization. And that's what we -- and we believe there's still pockets of permanent placement opportunities in tech, in construction in a few sectors. So this is -- I think this is going to be helping us in the quarters to come.

Just a quick parenthesis, we're talking about Adecco, but Akkodis is growing 2%. Aerospace and defense is growing 13%. Autos is even growing 3% in Akkodis. So on that side, we have a very good momentum in France. U.S. or Americas -- yes, Americas or U.S., we are growing nicely, and it's the same thing. So we're growing 15%. We've improved the margin 60 basis points. But as you said, we're still below 2%. It's a series of things. First of all, we grow faster in large accounts, 21% versus small and medium 7%.

And that branch, we had to recover from a very difficult situation. And the turnaround plan was, first, to drive growth in large accounts and then progressively improve branch after branch, improve the profitability in our go-to-market. We have 12% more branches that are profitable in Q1 at the end of 2025. So that's good. It's progressing. But we started 3 years ago from -- 4 years ago from a very, very difficult situation. So we're improving, but more to come, and that's going to deliver progressively EBITA.

I remind you that 2025 was the first year where we were positive in EBITA, okay, after so many years of being negative. So it's trending nicely. We're doing the right things. We have traction in MSP business. We have a revenue retention, which is over 100% per client. We are accelerating the talent supply chain model. We're seeing 25% fill rate improvement, Q1 versus Q4 in our competence development center. So we have traction. But given the size of the business, it takes time to fully deliver. But it's on track. Quarter after quarter, we're improving. We have a solid pipeline. Yes, we are anniversarying a few large clients, but we still have a solid pipeline. So I am very confident that our plan is delivering, and we continue to see nice results.

Your next question comes from the line of Konrad Zomer with ABN AMRO ODDO.

I just wanted to come back on the margin development in Q1. I think you've done really well on the top line, but clearly, the operating margin is still below 3%. And I think most of us on the call have already expressed a slight disappointment on the gross margin development. To me, it reads a bit like if markets go down, you struggle to fight the negative operating leverage. But if markets go up or at least if your top line goes up, you need to invest more in the business. Is it fair to say that structurally, over time, there will continue to be negative pressure on both the gross and the EBITA margin. Is that how you look at your business? Or do you still think you can get margins back up to historic levels?

Thanks Konrad. So let me first start with one point. You mentioned that it feels that when we grow, we need to invest. In Q1, we've grown 5.3%. Our SG&A were flat. And our SG&A over revenues was down 100 basis points. So I don't think that I agree when we say that to grow, we need to invest. That is exactly what we are demonstrating here that we are growing and the growth is dropping through in profit. Gross profit was up 3% in Q1. EBITA was up 24% organic constant currency. Net income was up 41% organic constant currency. So I really think we have to be careful when we look at our year-on-year drop-through of the growth that has been very profitable. I also want to remind you of one more thing. You mentioned us landing in Q1 below 3%. It's correct. It's 2.6%.

However, you know that typically, our margin expands way more stepping into H2 versus H1, which is normal because Q1 and Q2, our lower volumes, lower trading days, lower working days. So it is a normal behavior. What is important, I believe, is year-on-year, also the margin is up 20 basis points, 40 if you consider the fact that we had an unusually high FX headwind of 20 basis points. So on absolute terms, we're growing, but also in relative terms, we're really growing year-on-year. And this -- and its thanks to growth that is materializing more profit.

Your next question comes from the line of Simon Van Oppen with Kepler Cheuvreux.

One question for me, please. Obviously, in Q1, solid performance in terms of top line for Adecco, whereas Akkodis and LHH remain somewhat under pressure. I just have a question, under what circumstances would you consider selling one of your GBUs or exit certain markets permanently where you don't expect growth to come back?

Well, we are really pleased with the portfolio that we have. And as you understand, we have a growth agenda and every single piece of our business can deliver growth. Now we are constantly, of course, scanning the portfolio to make sure that we believe that every component of it remains relevant. We have, for example, in Germany, we've divested this past year -- in the beginning of this year, we've divested small businesses that we believed were not bringing value and were a drag to our performance. So we've done that. We continue to do that. There is nothing on our portfolio that of massive importance that would justify sell. And in terms of markets, I mean, we are -- as you could see, we are in a good place in many, many markets. There's no market that we don't think we couldn't turn around.

Now if I look at Akkodis -- if you look at Akkodis overall, we have a drag in Germany for sure, and it's autos, right? But Akkodis France is plus 2%. Italy is plus 4%. U.K. is plus 12%. Japan is plus 5%. U.S. is growing as well, like plus 5%. So we are -- I mean, this is growing. We have addressed this topic in Germany. We're also growing strongly in aerospace and defense in Akkodis, right, 22% overall. Even in Germany, we're growing 26%, okay? So we have very good underlying elements to our performance.

In LHH, yes, we are -- at the moment, we have subdued market in permanent recruitment, but career transition is growing 5%. Ezra, coaching platform, growing 35%. So all these elements make us very confident that our growth agenda will continue to deliver. And to Vale's earlier point, this growth that we have in revenue is very, very nicely dropping through into EBITA and EPS.

Your next question comes from the line of James Rowland Clark, Barclays.

Two quick questions, please. One on the outlook. You talked about your positive volume momentum continuing from Q1 to Q2, but the comps get about 2 percentage points tougher. So can you just help us with sort of on a year-on-year organic trend, whether you think you're seeing the same level of growth as Q1 or maybe given the tough comps that you're a touch below that, but obviously, that's still positive year-on-year.

And then in APAC, the margin is a fraction softer year-on-year, but it's already very high. And the region is now a very big sort of profit contributor for the overall group. I know you're investing there, looking to grow quickly, but is there a margin growth story here as well? Or should we think about flat performance in the medium term given you're putting a lot of branch and capacity into the region?

Thank you, James. I'm very confident in the fact that we are able -- yes, comp base is getting tougher, but look at the dynamic that we have. Look at the progressive growth that we demonstrated since the beginning of 2025, okay? Our teams are super motivated. They are compensated also through relative revenue growth. You heard me say that probably many times. I tell the team, I don't care about macros. What matters is that you run faster than the others. And that's how we've designed the incentives, and we are a fragmented market. So we're able to grow through very active sales team through a very strong value proposition across all these services that are very meaningful with our clients. We're able to grow because we are more and more efficient in the way we serve our clients. So I'm confident. Is it going to be -- are we going to have the same differential? I don't know. But I can tell you, we are on it. And volumes are trending very, very nicely so far.

And James, on your APAC question, of course, we're very pleased with the results in APAC. And I have to say that we are pleased both when we look at Adecco, but also Akkodis. We see APAC, of course, as an engine of growth, and it is a profitable growth. If I think about Adecco, there are countries -- I mean, our biggest country is Japan. It's growing profitably. The productivity is up. It is one of the areas where we are investing because we see more opportunities. It's also an area where we grow nicely, not just in Flex, but also in outsourcing, and that's accretive for our margin.

And when I think about Akkodis, also Japan is a growth story and the profit is also very nice. The profit in -- it's one of the countries that has the highest profitability within the Akkodis GBU. So we're pleased. And yes, APAC is not just a growth, but it's a profitable growth story for sure for the group.

Your next question comes from the line of Virginia [indiscernible] with Bank of America.

I just had an additional one on Akkodis. Could you help us understand a little bit more what you're seeing on aerospace and defense as opposed to autos as 2 very different end markets and how you're thinking about the end of the year? I know you've touched on this on the call, but especially in A&D would be interesting to understand a bit more how you're thinking about the space?

Yes. Thank you for your question. We are having great momentum in aerospace and defense. We have very good momentum in Adecco as well, by the way, we're growing high double digit in aerospace over -- even though it's smaller volumes, of course. But we are having a good trend. In Akkodis, as I said, we are growing 22%. It's across most of our geographies. And it's a mix of, of course, the investment that the defense sector is doing in many, many countries linked to the geopolitics, but also aerospace has a really great, great momentum. So Akkodis is growing 22% in aerospace and defense. I mentioned even in Germany, we're growing 26%. So that's really good.

And we're growing with all the major players, the Airbus, Thales, Safran of this world, Rheinmetall and Deutsche Aircraft, all these big clients are asking us to support them. In France, we are growing 13% in aerospace and defense as well. So there's great momentum. We are doubling down on this sector. We are building capacity because there's really a long tail of projects that we have. We have great perspective, and we have extremely good positioning. The trust that our large clients have with us is really encouraging. So we are -- I see that as a very, very positive supporting trend in the future.

Your next question comes from the line of Simon LeChipre with Jefferies.

Yes. A quick follow-up, please, on the debt refinancing. Can you give us a refresh on the maturity profile of your debt and any material refinancing coming up? And what would be the implications for your interest cost for 2027? Should it go up from the EUR 80 million you are expecting for 2026?

So no, we're guiding from EUR 68 million in '25 to EUR 80 million, mainly because of the hybrid bond that we've successfully issued in last April. But we were very pleased because the coupon was very well done by our group treasury team. In terms of profile of debt, we continue to repay. So you would expect that not only, of course, we will repay the EUR 500 million hybrid bond in December 2026, but we also repaid the CHF 100 million bonds that also matures this year. So gross profit continues -- sorry, gross debt continues to go down in line with our trajectory to delever.

Thank you. I would now like to turn the call over to Denis Machuel, CEO, for closing remarks.

Thank you very much to all of you who have attended the call. As you could hear from what we said, we are very confident in the future. Since I joined 4 years ago, my agenda has been to grow the business in fragmented markets, okay? This is what is ahead of us. We've proven for the past 15 quarters, we've outperformed and gained share, 13 of them. And as we have this healthy top line, this is driving absolute profit growth. 5% revenue growth, 24% EBITA growth this quarter, 41% EPS growth this quarter, okay?

This is my agenda and it's delivering. We have big opportunities ahead of us. I was mentioning aerospace and defense, where we're doubling down and investing in further capabilities. I am extremely confident in the future. We have seen the volumes nicely growing in early Q2. We are in a very good place for this year.

Thank you very much for all your questions, and I look forward to maybe more closer interactions in the weeks to come as we do our road show. Have a great day. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q4 and Full Year 2025 Results.

[Operator Instructions] I would now like to turn the call over to Benita Barretto, Head of Investor Relations. Please go ahead.

Good morning. Thank you for joining our 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.

Thank you, Benita, and a warm welcome to all of you who joined the call today. And let me open with the full year highlights on Slide 4.

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% year-on-year, gross profit was stable, and the group delivered an industry-leading 19.2% 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 EUR 23 million, bringing our total net savings to nearly EUR 200 million when compared to 2022's baseline. And productivity increased 3% year-on-year. In turn, the group generated EUR 693 million of EBITA and stayed within the EBITA margin corridor on a full year basis at 3%.

Cash generation was strong with 102% cash conversion ratio, operating cash flow of EUR 613 million and free cash flow of EUR 483 million. Importantly, the group improved its leverage ratio, ending the year at 2.4x net debt-to-EBITDA, down 0.2x year-on-year and down 0.6x sequentially.

Let's turn now to Slide 5. And on the left side, we highlight our consistent outperformance relative to key competitors across the past 3 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 has made significant progress in 2025. The Adecco North American turnaround gained traction. Full year revenues were up 12% 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 EUR 58 million 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%.

The group's Change agenda also progressed. Adecco now has 6 recruiter agents live within the Talent Supply Chain structure in the U.K. and in France. The U.K. agents have achieved approximately 15% time savings in recruiting processes, and this is an encouraging start. And we will roll out agents across key markets in 2026 to scale these benefits.

And 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 achieved a 7% margin run rate, up 160 basis points year-on-year. And in LHH, targeted investments in Ezra digital coaching platform drove 42% 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 EUR 58 million in annual cost savings on a run rate basis by year-end. This included reducing the cost of sales by EUR 43 million and SG&A expenses by EUR 15 million, with EUR 8 million saved through real estate consolidation across 26 locations.

Last wave of rightsizing effort is in flight, lowering headcount by approximately 600 in total. In addition, select noncore assets were exited, eliminating approximately EUR 3 million of negative EBITA. The program incurred onetime charges of EUR 46 million in 2025 but has already delivered around EUR 15 million of in-year P&L benefit. As a result, Akkodis Germany achieved a healthy 5.4% 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 rightsized, 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 CHF 1 per share for fiscal year 2025. This represents a 46% payout ratio, in line with our established dividend policy of paying out 40% to 50% 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.

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 EUR 6 billion, rising 3.9%, our best quarterly performance this year. Gross profit grew 4% to EUR 1.1 billion with a healthy 19.1% margin, stable on an organic basis.

Our disciplined execution drove good operating leverage. We were pleased to see a strong productivity improvement of 11% and to deliver a strong drop down ratio of over 80%. In turn, the group's EBITA was EUR 225 million, up 20%, with a 3.8% margin, up 60 basis points.

Let's now discuss the GBU developments, beginning with Adecco on Slide 11. Adecco delivered a strong performance with revenues at EUR 4.8 billion, up 4.9% and improved sequentially. Flexible placement revenues increased by 4%. Outsourcing was very strong, up 14%, and MSP was up 6%. Permanent placement, however, was 6% lower.

Adecco's healthy gross margin was driven by firm pricing, client mix and lower permanent placement volumes, and productivity improved 6%. The EBITA margin improved 40 basis points to 4%, 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%.

Let's now move to Adecco at the segment level on Slide 12. In Adecco France, revenues were 2% lower, stable sequentially and ahead of the market. Logistics continued to weigh, while autos and manufacturing were strong. The EBITA margin of 4.4%, up 10 basis points, mainly reflects client mix and benefit from SG&A savings plans. Revenues in Adecco EMEA, excluding France, were up 4% and sequentially improved. Most territories achieved good growth and outperformed competitors.

Looking at the larger markets. Revenues were up 3% in Italy with solid activity in logistics, financial services and consumer goods. Revenues in Iberia were up 7%. Food and beverage, autos and financial services were strong. In the U.K. and Ireland, revenues declined 1%, 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 and Austria were up 2%, well ahead of competitors, with strength in autos, consumer goods and defense. The segment's EBITA margin of 3.9% was 50 basis points higher, mainly reflecting strong operating leverage and good cost mitigation.

Turning now to Slide 13. Adecco Americas delivered 21% revenue growth. North America revenues increased 23%, well ahead of the market, mainly due to strong activity from large clients. In sector terms, consumer goods, food and beverage and autos were notably strong.

Latin America revenues were up 19%, led by Colombia, Peru and Brazil. By sector, logistics, financial and professional services and retail were strong. The Americas EBITA margin of 3.3% expanded 150 basis points, reflecting client mix and strong operating leverage from higher volumes.

Adecco APAC remained strong with revenues up 7%. Revenues rose 6% in Japan, 14% in Asia and 7% in India. Australia and New Zealand returned to growth with revenues up 2%. APAC's EBITA margin of 4.3% mainly reflects the timing of income from FESCO.

Let's now focus on Slide 14 and Akkodis' strengthened performance. Akkodis' revenue were 1% lower and sequentially improved. Consulting & Solutions revenue were up 2%, marking a return to growth for this service line. In EMEA, revenues were flat. Germany was 7% lower, driven by autos headwinds. However, revenues in France were up 3% and ahead of the market in aerospace and defense and autos. And the U.K. and Italy performed notably well.

North American revenues were up 3%, ahead of market, supported by further modest improvement in tech staffing demand. And Consulting & Solutions grew 46%. Revenues in APAC were 4% lower. Japan's result was heavily influenced by trading day differences. On an adjusted basis, revenues were up 5%. Revenues in Australia were 10% lower in a tough market. Akkodis' EBITA margin of 7% 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%. In Professional Recruitment Solutions, revenues were 3% lower, taking share in a subdued market. Recruitment Solutions gross profit was flat with the U.S. 3% lower and Rest of World up 4%.

Permanent Placement was up 4% and productivity was 8% higher. Career Transition was robust with revenues up 1%. U.S. revenues were 2% lower on a high comparison, while the U.K. and Switzerland were strong, and the pipeline remains healthy.

Revenues in Coaching & Skilling rose 27%. Ezra's revenues were very strong, rising 68% while General Assembly's B2B business grew 31%. LHH's EBITA margin was 9.7%, up 510 basis points. The year-on-year development is flatted 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%.

Let's now turn to Slide 16. Gross margin was healthy at 19.1%, stable year-on-year on an organic basis. The group's gross margin was driven by negative FX impact of 10 basis points; 20 basis points negative impact coming from flexible placement, mainly reflecting client and country mix; 10 basis points negative impact from permanent placement, reflecting lower activity in Adecco; and a 30 basis points positive impact in Outsourcing, Consulting & Other Services, mainly driven by Akkodis Germany.

Let's now look at Slide 17 and the group's EBITA bridge. At 3.8%, 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 at healthy levels, 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%, down 70 basis points, while G&A costs were just 3% of revenues. Productivity, measured as direct contribution per selling FTE, rose 11%.

Moving to Slide 18 and the group's cash flow and financing structure. The last 12-month cash conversion ratio was strong at 102%. Full year operating free cash flow was EUR 613 million. Free cash flow was EUR 483 million. Both outcomes are strong given the group's continuous improvement in revenues.

In Q4, operating cash flow was EUR 476 million, a modest EUR 15 million 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 very pleased to report that the group's DSO improved 0.4 days to 51.8 days, remaining best-in-class.

Capital expenditure was EUR 50 million, and free cash flow was EUR 426 million, a modest EUR 20 million decrease from the prior year period.

The group also strengthened its balance sheet. Gross debts were reduced by EUR 280 million in 2025, supported by the repayment of CHF 225 million senior bond in Q4. At the end of Q4, net debt was EUR 2.29 billion, EUR 186 million lower.

Leverage ratio improved to 2.4x, down 0.2x year-on-year and down 0.6x sequentially. The group is firmly committed to bringing the net debt-to-EBITDA ratio to 1.5x 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 hand back to Denis.

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 1.5x by year-end 2027.

With this said, thank you for your attention, and let's open the lines for Q&A.

[Operator Instructions] Our first question comes from the line of Andy Grobler with BNP Paribas.

Just a couple from me, if I may. Firstly, just on free cash. 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?

Thank you, Andy. And Valentina is going to answer the first part, and I'm going to answer your second question.

Andy, on free cash flow, it was a very strong performance. You've seen that we landed on EUR 483 million and the conversion ratio was very strong, above 100%. And it's particularly strong, this performance, if we consider that we've done it on the back of a year and, most importantly, a Q4 where we were growing. And you know that our business absorbs working capital when we grow at this level.

If I try to unpack a bit what are the most important components, fundamentally, it all goes down to very strong working capital management. We've been very diligent on collections. And you've seen how our DSO continues to be very strong. We are down year-on-year. It's not easy to keep going down on year-on-year in this market. So we're very pleased with that.

And in terms of AP, yes, we did have some favorable timing on payments, but we've also done quite a lot of job in terms of carving out overbalancing, negotiating payment terms. And 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 would -- I really think about free cash flow generation this year to -- the behavior to 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 of our strong free cash flow performance this quarter.

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., but apart from that -- 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's says something also a little bit about, of course, the uncertainty that we live in. But the economy is pretty good. So 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 have very strong delivery engine. And that makes me very confident.

There's one sign, which is interesting, is we see a little bit of a pickup in permanent recruitment in LHH. It's 4%. It's not big yet and we start from your volumes, but it's a little bit positive. But overall, I'm very, very optimistic on the momentum that we have. We have a great momentum as well in outsourcing, you've seen double-digit growth. I think the market is there to support our development.

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 kind of gross margin in your contract temp businesses is lower. Could you just talk through what's going on in that segment, please?

Well, actually, you've got to look at LHH as in 2 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%. In the rest of the world, we are plus 4% overall. So that says something about the geographic differences. But overall, I mean, let's be clear. We are -- the whole industry is operating at pretty low historical level. But we are -- what we do is we are outperforming the market, which matters to me.

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 also some of these elements. And LHH productivity was up 12% in Q4 and their sales FTE was down 4%. So you see how they are acting also on what Denis just mentioned.

Your next question comes from the line of James Rowland Clark with Barclays.

My first 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 EBIT 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 the end of '27. 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 '26 and '27 or vice versa? And if so, why?

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.

As much as I believe that the way we operate, the way we've put in place a very strong sales dynamic, which is -- which we adjust as per market conditions, as per the industry we are facing, et cetera, as per the geographies, and 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 it's overall the market conditions that are also improving.

And we have been through some difficult quarters in, I would say, end of 2024 and beginning of 2025. And 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 it's -- I would say it's a bit of both that help us grow as we do.

Vale, now on EBITA?

And I'll build on the comments that Denis just mentioned about momentum just to give you some more flavor on guidance for Q1 EBITA. So I think that what you mentioned, James, is reasonable. And the way that I think about our Q1 EBITA is the continued positive volumes behavior gives us confidence in terms of revenue outlook. And gross margin is broadly stable sequentially.

If you think also about the comparison year-on-year is we have a 20 basis point headwind coming from FX. You may remember that last year in Q1 '25, 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 EUR 10 million, EUR 15 million. So the fact that we're guiding for broadly stable tells you about the cost discipline that we continue to enforce. And you saw that we've mentioned the FESCO income because we assume FESCO to continue to contribute positively on a full year basis. But the timing last year, it 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 assumption that you mentioned are quite reasonable.

Moving to leverage. I think it's -- the free cash flow generation, the performance that we had -- the trajectory of the performance that we had throughout 2025 delivered good delevering, 0.2 year-on-year and sequentially, 0.6. The path to 1.5 is clear. We don't guide specifically on '26 and '27. But clearly, the levers that we have in our hands, and we are already pulling are 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. And then we have additional benefits coming from Akkodis Germany, but also other elements like the turnaround in North America, like the improvement in France that will continue to help us get there, as we've shown you in the last -- in recent quarters.

Your next question comes from Suhasini Varanasi with Goldman Sachs.

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% growth that you reported last quarter?

Suhasini, I'll take this one. Just to give you a sense, the exit rate was very much aligned with the quarter leverage, so at group level. So I hope that's helpful to give you a sense.

Your next question comes from the line of Simon LeChipre with Jefferies.

First question. Looking at your Q4 results and if we exclude Akkodis, so gross margin was down 30 bps on an organic basis and SG&A was probably flat organically. And 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 I mean, 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. So I would assume the seasonal effect from Q4 to Q1 is negative. It seems you're also talking about like FX negative impact being a bit stronger. So how would you offset these 2 factors to get to a stable gross margin sequentially?

And last thing 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. So how do you think about the net bottom line impact in the future? Like do you think your SG&A would continue to reduce? And would that be enough to offset this potential deflationary trend on the top line?

I'll take the AI piece and Valentina will be very happy to take the gross margin question and the FX.

So starting with your 2 questions on gross margin, Simon. I think when you think about the performance that we had in Q4 at 19.1%, it's a very healthy level. It's 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 buildup.

Yes, Akkodis Germany is a component of it, but it's not the only one. And then there's clear added value in the gross margin that comes from the service lines that have higher gross margin profile, like outsourcing, like Ezra.

You've heard us mentioning a number of service lines that have grown double digit in Q4, and will 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.

When you look at -- and by the way, permanent placement continues to be subdued clearly. When permanent placement picks up, it is a further lever that we can capture because we will capture permanent placement growth when it comes, and that's another further lever we can pull.

When you think about Q1, let me just take a moment to walk you through the elements. You've called out FX. It's correct. As I was mentioning before, actually it 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 we again 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 how the benefits of the other service lines of Akkodis that we are implementing is affecting the modest client mix that we have in flex and perm.

Sorry, may I have just a quick follow-up on GM and also on SG&A. So it was minus 1% organically year-on-year in Q4, so I think mainly driven by Akkodis. So does that mean like the Adecco GBU, as you know, is now trending kind of flattish year-on-year?

No. We continue to see the same performance. We call 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, it is coming through SG&A but it's broad-based. And 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%, and that is not just Akkodis. It's broad-based.

Let me take now the AI impact. And I think there is a top line impact, 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 our clients. So 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 our 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% quarter-on-quarter. This helps us be more efficient, deliver more. So -- but a positive impact on the top line. In doing so, we have operating leverage, as Valentina was saying.

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, and this is going to create also 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.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

Denis, Valentina, just one question remaining on my side. Focusing a little bit on North America and the very high growth there. I mean, 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% organic growth you're currently growing out in that country, what we should expect in terms of potential normalization over the next few quarters?

Yes. Thank you, Remi. Yes, if I go back to history, Q1, we were minus 1% year-on-year. Q2, we are plus 10%. Q3, we are plus 21%. And Q4, we are plus 23%. So of course, this is -- we're very pleased. This shows that all the efforts that we've put in the turnaround plan in the U.S. is delivering.

We have productivity improve by 10% and we have a very strong dynamic on the large accounts. We also are positive in the SMEs, but that's the point 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.

So to your point, yes, I mean, we -- let's be clear, we started from a low base, okay? So we are -- I mean, this 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 to sort of a bit of a normalization.

Still our focus and our efforts will be to gain share, to be ahead of the market. And 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. So I mean, there's traction in the market. The economy in the U.S. is still pretty good. So we will serve on that. We are much stronger than we were 2 years ago. And yes, you can expect growth, probably not with such a differential with the market.

Understood. And just maybe building up a little bit on the question from Simon on the operating cost guidance for Q1. I mean, 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?

I mean, discussing with some of your competitors, it feels like that they are forecasting some wage inflation around 2% or a little bit more than that. The higher volume of activity, the 4% organic growth and positive momentum probably would mean under a normal cycle that you need to invest a little bit more in resources. So yes, so can you help us a little bit on that stability of operating costs?

And I'm just trying to understand as well if to what extent you think that 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?

Let me start by a little bit of how we strategize that growth. And you heard me say in the past that what we try is to be very, very granular in the way we inject the resources that are linked to the dynamic of the market.

And if I talk markets, it's by country. It's even by region in a country. It's by industry in a particular region, a particular country. So really adjust with the -- through this empowerment that we've put in place years ago, that's what we -- we let people adjust 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. And definitely, we will -- we have improved our cost inefficiencies. We've really readjusted our SPs. We 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.

And just to give additional color, Remi. 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 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% utilization rate approximately.

So -- but if you look at our employee -- 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 2 clear levers that has been key to the operating leverage that you've seen in our results.

And just to complement on AI. Yes, we see a 30 bps improvement when we serve the clients by -- through AI initiatives. But it's not at the scale that I want to see. We said that we would cover 60% 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.

Okay. And the last question is on the SME, which you referred to, Denis, I think, in one of your previous answers, saying that you need to address this segment better. Is the issue market related? Is just the momentum between the 2 markets, if you see separate them between SME and large enterprise, is still very, I mean, 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 it has implication, obviously, for gross margin and profitability, I guess.

Yes. Well, actually, we've really doubled down in the past couple of years in how we serve the large clients and enhance Talent Supply Chain and enhance all that. 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 branch network is that proximity, that deep understanding of the local ecosystems. And that's one of the top priorities for 2026 is to inject as much energy and technology into the SME segment as we have done in the large accounts.

Your next question comes from the line of Simon Van Oppen with Kepler Cheuvreux.

I have a question on margins. We see margins in all divisions strengthening in Q4, most significantly in Akkodis 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?

Thank you, Simon. So let me explain a bit around each GBU and how they evolved in terms of margin, and then we can also quickly touch on formal one-offs guidance. I think what is the common denominator among the 3 GBUs improvement is volumes up, operating leverage drop through. 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% 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, to give you a sense. And it 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 is half of it, 250, which is still a very significant improvement. And it's mainly coming from CT continuing to performing very well, but also the contribution of other lines like Ezra and like the B2B business in GA that have grown double digits, and they come with very healthy high gross margins.

And then finally in Akkodis, clearly, the main driver of the improvement in performance is 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 EUR 60 million this year to EUR 40 million next year. The EUR 60 million 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.

Your next question comes from the line of Gian-Marco Werro with ZKB.

Two questions from my side. The first one is on the gross profit margin in flexible placement. I would appreciate if you can dive there a little bit deeper into this development of 20 basis point decline year-over-year.

Can you maybe elaborate, please, 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 there the dynamics, how is it evolving, still increasing, stable or declining?

And then second question is on AI also. Denis, I appreciate your optimistic tone about the opportunities lying here. But very frankly speaking, don't you also see also, 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 negatively. I would appreciate if you can just talk briefly about the dynamics that you observe in the industry.

So 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, okay, which is the world leader in outplacement, 1.4% of the people are telling us that they've been laid off due to AI. That's it, okay? And 12% say, yes, there was a bit of AI coming in. So to date, there's no massive impact, no impact of AI.

And let's be clear, and I'm not the only one to say 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, okay? So now nobody knows within 3 or 5 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, et cetera. So this is going to come as well with AI, okay?

So I believe that because of this, I'd say, 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. It has been now around for more than a couple of years. And look at our numbers, okay? So we are trending nicely in this world of AI. We are reshaping the future of work in this AI era, And we are well placed to accompany our clients on their agility that is necessary with AI. So that makes me very confident. Now on the gross margin.

So 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 were asking about, what about countries, France, U.S.? It is really all about how do we grow, right? So sometimes 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.

Okay. But no specific comments you want to make here on the 3 countries I mentioned, about the development of the gross margin? If it's stable or you mentioned that most probably...

The trends in these 3 countries are aligned with the overall trend of the GBUs, yes.

Your next question comes from the line of Karine Elias with Barclays.

I just had a quick one on the hybrid. I believe on your third quarter conference call, you mentioned your intention to refinance at the time the hybrid. Just wondering whether that's still the case.

Thank you, Karine. Yes, so the refinancing, you're correct. We are refinancing the hybrid. We are in progress of doing that. We are constantly in the market to understand when is the right moment to execute. But you should expect that to be happening.

Your next question comes from the line of Andy Grobler with BNP Paribas.

Just one follow-up, if I may. Just 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 by the end of next year?

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, 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, which 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 shareholders, for qualifying shareholders on the tax side. So I think it's a pretty good decision for shareholders. Now on the...

On the leverage.

The leverage, yes.

As Denis mentioned, the scrip is an option, completely independent from the path that we've discussed to reach our 1.5. 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.

I will now turn the call back over to Denis Machuel, CEO, for closing remarks.

Thank you very much, everyone. We really appreciate your presence today. So just to wrap up, I think 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, in a very good place to deliver profitable growth moving forward and to delever.

With that, thanks a lot for having been with us today, and speak to you next time. Have a great day. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q3 Results 2025. [Operator Instructions] I would now like to turn the call over to Benita Barretto, Head of Investor Relations. Please go ahead.

Good morning. Thank you for joining the Adecco Group's Q3 Results Conference Call. I'm Benita Barretto, the group's Head of Investor Relations. And with me are the Adecco Group CEO, Denis Machuel; and CFO, Coram Williams. 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 Denny.

Thank you, Benita, and a warm welcome to all of you who have joined the call today. So today, I want to share an important leadership update which also underscores the strength of our succession planning and our commitment to continuity. At the end of this year, Coram Williams will step down as Chief Financial Officer after 5 years of outstanding service. Coram has played an absolutely pivotal role in guiding the Adecco Group through a period of significant transformation and strengthening our financial foundations. His disciplined approach and strategic insight have been absolutely instrumental in achieving the strong Q3 results we announced today.

We warmly thank Coram for his tremendous contribution and wish him every success as he takes on a CFO role in the automotive sector in Germany, a move that reflects his passion for this sector and also brings him closer to his family.

And I'm pleased to announce that Valentina Ficaio will succeed Coram as CFO effective January 1, 2026. Valentina is a proven leader with deep knowledge of our business and strong financial and strategic acumen. She's been part of our global finance leadership team, most recently leading financial planning, controllership and strategy and has acted as Coram's deputy for the past 3.5 years. Her appointment follows a rigorous selection process and represents an internal promotion to the CFO role, which is a testament to the strength of our talent pipeline. This leadership transition is well planned, and we remain focused on delivering sustainable growth, improving margins and creating long-term shareholder value.

Let's now turn to our results and starting with Slide 4 and an overview for the quarter. We gained significant market share this quarter with the group and Adecco, leading key competitors by 375 and 300 basis points, respectively. The group delivered EUR 5.8 billion in revenues, 3.4% higher year-on-year on an organic trading days adjusted basis. Revenue trends improved sequentially across all GBUs. Additionally, we observed a strong performance from Adecco U.S. with revenues increasing by 20% year-on-year. Gross profit reached EUR 1.1 billion with a gross margin of 19.2%, while this represents a modest year-on-year decrease of 10 basis points on an organic basis, it is a 30 basis point sequential improvement, fully matching our Q3 guidance.

Gross margins benefited from reduced pressure in Akkodis Germany, where the turnaround plan is progressing well. EBITA excluding one-offs, was EUR 195 million with a 3.4% margin. Disciplined execution drove good operating leverage with productivity up 8% year-on-year and higher in all GBUs. Adjusted EPS was EUR 0.67. Cash conversion was very strong at 110%, and the group generated a solid operating cash flow of EUR 200 million, up EUR 79 million from the prior year period. In summary, the group delivered a strong performance this quarter and remains on track to achieve the 3% EBITA margin floor for the full year.

Moving now to Slide 5. The group delivered a further increase in market share this Q3. In Q2, the group gained 205 basis points in market share and Adecco gained in 130 basis points. In Q3, the group gained 375 basis points of share and Adecco gained 300 basis points. We have seen a consistent improvement in flex volumes year-to-date across the Adecco GBU. In Q3, we were encouraged to see volumes move clearly into modest growth territory with a meaningful uptick in demand from the largest Adecco countries.

Now as we move to Slide 6, you will see case studies that demonstrate our strong win momentum in the market. First, in the life sciences sector, Adecco and Akkodis were selected as the preferred suppliers for global solutions due to the group's global footprint and breadth of services. The client was impressed by our technology expertise, reporting quality, market insights, all of which are underpinned by strong data analytics. Second, Akkodis was selected as a Tier 1 supplier to a leading German aerospace company, our comprehensive suite of advanced system engineering solutions covering lending gear and system design and installation, supports the client's strategic need for innovation to improve operational efficiency and sustainability. Akkodis' global presence which maximizes responsiveness and cross-fertilization of ideas was key to be selected.

Third, LHH's EZRA won a multiyear contract with a leading U.S. software provider for AI and human coaching services beating a major competitor. EZRA will coach over 27,000 employees, creating a measurable business impact.

With that, I will now hand over to Coram for further details on the Q3 results.

Good morning, everyone, and thank you, Denis, for your kind words earlier. It's been an honor to be the CFO of the group over the last 5 years and a real pleasure to work with you and the talented teams that we have around the group. The Q3 results that we're announcing today show that the group is on a good path and affirm my decision to step back and pursue a new role in a sector I'm passionate about in my adopted home country. I'm really delighted that you and the Board have chosen Valentina as my successor. She's been a strong member of my team, a brilliant deputy and I have no doubt that she is the right person to drive the group forward.

With that said, I'd like to now focus on the Q3 results. First, let's discuss GBU developments, beginning with Adecco on Slide 7. Adecco delivered EUR 4.7 billion in revenues, up 4.5% year-on-year on an organic trading days adjusted basis and up 2.8% sequentially. Flexible placement revenues increased by 4%. On an organic basis, outsourcing remained strong with revenues up 12%. Permanent placement revenues were 7% lower, while MSP Pontoon revenues rose 5%. By client type, revenue growth from SMEs was strong, up 5%. Gross margin was healthy, reflecting the client and solutions mix, particularly lower perm volumes. Pricing remains firm.

Productivity improved by 5%, while selling FTEs decreased by 1%. The EBITA margin improved 50 basis points year-on-year to 3.9%, reflecting higher volumes and operating leverage, aided by G&A savings and agile capacity management. Adecco's dropdown ratio this quarter was north of 100%, a very strong outcome.

Now let's move to Adecco at the segment level on Slide 8. In Adecco France, revenues were 2% lower year-on-year, improved sequentially and outperforming the market, driven by robust growth across large clients. Growth in autos, financial and professional services, food and beverage and the strategically important construction sector was strong. However, logistics presented some challenges. The EBITA margin of 4% was 80 basis points higher year-on-year with France benefiting from the execution of G&A savings plans. Adecco EMEA, excluding France, returned to growth, with revenues up 3% year-on-year and taking market share.

Looking at the larger markets, revenues in Italy were flat, with strong activity in logistics and food and beverages offsetting weak autos demand. Iberia was strong, with revenues up 13%, reflecting strength in flex and outsourcing as well as double-digit growth from SMEs. Food and beverage, financial and professional services, manufacturing and autos were strong. In the U.K. and Ireland, revenues declined by 4% year-on-year. a resilient result given the challenging market environment. While soft demand in logistics and the public sector impacted performance, the business continues to demonstrate adaptability. Revenues in Germany and Austria were flat year-on-year, reflecting a solid outcome in a demanding market.

The manufacturing and automotive sectors performed robustly, supporting overall stability. The segment's EBITA margin of 4.1% was 20 basis points higher year-on-year. The margin reflects client mix and good operating leverage with productivity up in all territories and support from G&A savings.

Turning now to Slide 9. Adecco Americas delivered very strong revenue growth of 20% year-on-year. North America revenues increased by 20% year-on-year, improving sequentially and ahead of market trends. The result was driven by strength in Flex across all client segments, including double-digit growth from SMEs. In sector terms, consumer goods, autos, manufacturing and food and beverage were notably strong. This growth rate shows the continuing progress we're making with the turnaround of Adecco U.S. At the same time, we do have work to do on the business mix and cost to serve to restore margins further.

In Latin America, revenues grew 21%, with all countries experiencing double-digit growth, driven by demand for flex and outsourcing across SMEs and large clients. By sector, financial and professional services, logistics and manufacturing were strong. The Americas EBITA margin of 2.5% increased 240 basis points year-on-year, reflecting higher volumes and operating leverage. Productivity improved, while the segment continues to optimize costs. Adecco APAC remains strong, with revenues up 9% year-on-year and ahead of the market, led by strong demand from SMEs. Revenues rose 8% in Japan, 18% in Asia and 14% in India. In Australia and New Zealand, revenues were 3% lower. In sector terms, financial and professional services, consumer goods, food and beverage and defense was strong. The EBITA margin of 4.7% reflects higher volumes, G&A savings and modest investment in capacity to capture future growth opportunities.

Let's now focus on Akkodis on Slide 10. Akkodis' revenues were 3% lower year-on-year on an organic constant currency basis and sequentially improved. Consulting and Solutions revenues were 1% lower organically, improving by 4% sequentially. By segment, EMEA revenues were 3% lower. France returned to growth, with revenues up 1% and ahead of the market. Aerospace, defense and autos were strong. Revenues in Germany were 9% lower, driven by market headwinds in autos and despite good momentum in defense. Italy, Iberia and the U.K. performed well. North America revenues returned to growth, with revenues up 1%.

The business has seen a modest improvement in tech staffing demand and delivered very strong growth in the Strategic, Consulting and Solutions segment, with revenues up 45%. APAC revenues were stable, with Japan and China up 2%. Revenues in Australia were 4% lower, reflecting a slow market backdrop. Akkodis' EBITA margin was 4.5%, 60 basis points lower year-on-year. Excluding Germany, the margin was 6.5%, and an improvement year-on-year, reflecting solid utilization rates and good cost discipline. Germany's turnaround is progressing well. Given the market context, the level of targeted savings has risen to approximately EUR 50 million.

To date, an annualized savings run rate of approximately EUR 36 million has been achieved, driven primarily by adjusting consulting headcount, which improves bench utilization and G&A savings. Additional savings were expected in Q4. These actions will enable the unit to return to healthy run rate profitability by year-end.

Let's move on to LHH on Slide 11. LHH executed well with revenues returning to growth, rising 4% in the third quarter on an organic constant currency basis. The EBITA margin reached 9%, up 240 basis points year-on-year, driven by higher volumes and strong operating leverage with a 25% increase in productivity. Turning to LHH's segment. Professional Recruitment Solutions revenues were 7% lower, with the unit taking share in tough recruitment markets. Recruitment Solutions revenues were 5% lower, primarily due to an 8% decline in permanent placement.

Gross profit was 6% lower. Productivity remained flat and billing FTEs decreased by 6%. Our peer activities remain soft. Career transition performed very well, with revenues up 9%. U.S. revenues grew by 7% and revenues outside the U.S. increased by 11%. The pipeline remains healthy across all geographies, supporting future momentum. Revenues in coaching and skilling rose 40%. EZRA delivered outstanding growth with revenues increasing 59% to another record high. General Assembly returned to growth, with revenues up 48%, driven by strong momentum in its B2B business, which focuses on AI-related offerings.

Let's turn now to Slide 12, which shows the group's gross margin drivers on a year-on-year basis. Gross margin was healthy at 19.2%, 10 basis points lower year-on-year on an organic basis. Currency translation had a negative impact of 10 basis points. Permanent placement has a 25 basis point negative impact with headwinds in both Adecco and LHH. Career transition had a positive impact of 10 basis points. Outsourcing, consulting and other services had a 10 basis point negative impact due to mix in outsourcing and ongoing pressure in Akkodis Germany. Additionally, training, upskilling and reskilling had a positive impact of 15 basis points driven by growth at EZRA and General Assembly.

Let's look at Slide 13 and the group's EBITA bridge. At 3.4%, the EBITA margin, excluding one-offs, was 10 basis points higher year-on-year, driven by a 10 basis point negative impact from currency translation, a 10 basis point negative impact from organic gross margin development, a 40 basis point favorable impact from operating leverage and a 10 basis point negative impact from Akkodis Germany. In Q3, SG&A expenses, excluding one-offs, as a percentage of revenues, were 15.9%. And 30 basis points better year-on-year, reflecting cost discipline with G&A expenses up 3% of revenues and agile capacity management. Selling FTEs were 3% lower. Productivity in terms of direct contribution per selling FTE rose 8% with all GBUs improving year-on-year.

Let's turn to Slide 14 and the group's cash flow and financing structure. The last 12 months cash conversion ratio was strong at 110%. DSO remains best in class at 53.6 days. The group delivered cash flow from operating activities of EUR 200 million in the quarter, a EUR 79 million increase versus the prior year period. The cash result reflects strong working capital management, partially offset by increased working capital absorption, resulting from improved revenue performance. CapEx was EUR 30 million, and free cash flow was EUR 170 million, an increase of EUR 88 million compared to the prior year period. The group benefits from a robust financial structure.

We have strong liquidity, including an undrawn EUR 750 million revolving credit facility. 80% of debts have fixed interest rates and there are no financial covenants on any outstanding debt. The group also has low interest expenses with a net charge of EUR 13 million in Q3. At the end of Q3, net debt was EUR 2,705 million, EUR 220 million lower year-on-year. Since 2021, the group's capital structure has included a EUR 500 million hybrid bond, which rating agencies classify as 50% equity and 50% debt. Management is in the process of refinancing this hybrid bond, reaffirming its long-term role in the capital structure. In light of this planned refinancing, and to align with rating agency methodology, the group will now apply 50% equity treatment to the hybrid bond when reporting its leverage ratio.

This adjustment does not impact the group's credit rating or the net debt calculation. It does, however, ensure consistency and transparency in how leverage is assessed across stakeholders. Applying this methodology, the group's end Q3 leverage ratio was 3 terms. On an underlying basis, strong cash generation and EBITDA improvement in Q3 has reduced the group's net debt-to-EBITDA ratio, excluding one-offs, by 0.3x sequentially. The group remains firmly committed to bringing the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027, absent any major macroeconomic or geopolitical disruption. Our capital allocation policy is clear on options for excess capital once we achieve this target.

Let's move to Slide 15 and the group's outlook. Based on Q4 volumes to date, the group expects revenue growth in Q4 to be in line with Q3's revenue growth year-on-year on an organic trading days adjusted basis. For Q4, the group expects gross margin and SG&A expenses, excluding one-offs, to be broadly stable sequentially. The group is focused on managing capacity with agility to balance share gain and productivity in mixed markets, in addition to securing G&A savings. The group is on track to deliver its full year EBITA margin commitment.

And with that, I'll hand back to Denis.

Thank you, Coram. And let me conclude with Slide 16 and few takeaways. In Q3, the group delivered a further increased market share with revenues improving sequentially across all GBUs. At the GBU level, we were encouraged by the strong growth in Adecco U.S., evidencing traction with the turnaround plan. Meanwhile, the Akkodis German turnaround is progressing well with the unit expected to return to healthy run rate profitability by year-end. In reaching a 3.4% EBITA margin this quarter, we demonstrated good operating leverage.

Cash generation was solid. We thank our teams for yet another quarter of rigorous execution. We look forward to sharing the evolution of our strategy and detailed value creation plans at our Capital Markets Day on 26th of November in London. With this said, thank you for your attention, and let's open the lines for Q&A.

[Operator Instructions] Your first question comes from the line of Andy Grobler, BNP Paribas.

I've got a lot, but just a couple to start with, if that's all right. From a cost base perspective, a couple of things here. As you move into Q4, what are the incremental savings that you expect to drive? And does that include turning that about EUR 16 million loss in Akkodis Germany into a positive? And how should we think about that as the right base going into 2026 if you could chat through that, that would be really helpful. And also, just adding to that, does that guide include the currency headwinds that you'll see in the Q4? And then secondly, on cash flow, very strong performance through the quarter. Can you just talk through the drivers of that and whether you're seeing any pressure on payment terms? Has that been incremental through this year?

I think I'll let Coram answer most of these questions. I'm just going to say a word on payment terms. Yes, definitely I think we have pressure from our clients on payment terms. We resist actively to this pressure. We are -- I think we are very focused with our teams managing these kind of negotiations. We see also our DSO remaining relatively solid. So I think we are able to -- thanks to the strong relationship that we have with our clients to resist to the maximum on the payment terms request from our clients. I mean for all the other questions, Coram.

Thank you, Denis. Thank you, Andy. Actually, let me start with cash, therefore and build on Denis' answer. I mean, yes, we do see pressure on payment terms, but our DSO is at 53.6 days. It is quite clearly best in class at the moment where our peers see their DSOs going in the wrong direction. So I think it's very clear that we are managing that and managing it very effectively. On the cash flow itself in Q3, I mean, we tried to unpick the drivers.

Fundamentally, you have good working capital management, which includes the point I'm making about keeping DSO very stable, but also payables, where we've been managing those very tightly and have done for a number of quarters, which is partially offset by the working capital absorption that you see because of the growth that the business is delivering. And we know that's a feature of the way this operates. So when you put all of that together, then we're very pleased with the operating cash flow of EUR 200 million.

It's up year-on-year, and it has obviously helped us deliver that rolling 12-month cash conversion of 110%. On the cost side, yes, the guide includes FX movements. If you step back and look at what we're saying, we're guiding to SG&A being broadly stable. Typically a seasonal movement between Q3 and Q4 actually increases SG&A little bit, usually between EUR 10 million to EUR 20 million. So you can see by saying that we will hold it stable, we are confident we will continue to deliver savings. Part of that comes from Akkodis, as you mentioned, we have real estate optimization, which will flow through, but we also have further savings in other parts of the business that we've been activating through the year.

You saw the benefits, for example, on the margins in France. There are other territories where we continue to manage this. By the end, and I'm now just moving on to Akkodis Germany. The restructuring there is progressing well. We have EUR 36 million of run rate savings locked in. We've got clear plans for how we get to a run rate of EUR 50 million, and that will deliver healthy run rate profitability for that business by the end of the year. And I think it's important to make the point that we are not presupposing an improvement in the top line of that business in the short term. We're managing the restructuring to make sure that we see healthy profitability on the market conditions that we now see.

And just maybe one last word. Andy, top line in Akkodis Germany is being stabilized. So I mean, we can go in details around what we do very actively in Germany on our turnaround plan, but there's also an element of stabilization of top line, of course. But thanks, Andy, for your questions. .

And just to add, Coram, best of luck with the new role.

Thank you, Andy. I appreciate it.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

A few questions on my side, if I may. So just first taking a step back and looking at your outlook for stable growth on the same comp base. It feels like similarly to some of your competitors, you are assuming that the recovery of organic growth we've seen over the last few quarters is stalling a bit or kind of stabilizing. So what makes you slightly more cautious compared to the sequential improvement we've seen over the last few quarters. Just wanted to understand if there was anything there? And if so, what part of the business, which divisions do you think could improve, remain stable or deteriorate in Q4 just to have a bit of breakdown of that stable organic growth comment for Q4.

The second question is on the U.S. organic growth. Obviously, I mean, very impressive. Can you just elaborate a little bit on this? What are the drivers in terms of type of clients if you think the broad-based recovery or has it been driven by any specific contract win and on the market share gains in that country, why do you think is the case that your winning volumes away from your competitors? And then the last one would be just maybe a little bit of a teaser on end of November, then if you wanted to share with us a few of the topics you think could be important to address during the CMD?

Thank you, Remi, I think I'm going to take the 3 questions. So on the outlook, actually, we're pragmatic. We're looking at our flex volumes data. And they are -- let's say, they are nicely up year-on-year. They continue to do so, but we have only a few weeks of data. So we are -- definitely, we see some momentum. We see an improving momentum in the HH and Akkodis, but we are -- we've always been -- I must say, we've always been relatively cautious. When we see it, we talk about it but I don't want to overpromise and create expectations.

So we have volumes, as I said, nicely up, but it's not stored definitely. It's not stalling. It's improving nicely, but this is reasonable. So it's not -- it's -- I continue to be positive about what we have ahead of us. As far as the U.S., yes, actually, it's broad-based. It's also the result of our turnaround. It's -- and there's so much more to do. Let's be clear. And we are -- we're pleased with the growth. We were plus 10% in Q2. We are now plus 20%. We've returned the U.S. to be profitable, which is good. We are growing ahead of the market. So it's been systematic. It's been rigorous execution on how we improve branch profitability, how we see that the incentives that we've put in place in the branches that are boosting both flex and perm are delivering results.

We're focusing on increasing the traction with the MSP business. We are really, really focused on cutting our cost to serve to preserve our competitiveness. We've moved into more centralized delivery, nearshore offshore delivery. We have adjust also our G&A costs. So and all that. It's a series of things that we've applied rigorously and systematically for now, almost 3 years, and it starts to deliver results, which is good. The sales growth is broad-based. We grow large accounts, plus 36% this year. We also grow SME plus 12%. So that means both drivers are executing nicely.

We have a nice development of new accounts in branches. If I look at the number of new accounts that we had in Q2 versus -- in Q3 versus Q2, it's plus 19%. So we've also had a healthy development of new clients and branches, okay? But we're not there yet. Let's be clear. We start from a low base because we -- what we've been through some -- so encouraging, good, people deliver. So it's, as I said, it's encouraging, but I wouldn't call it impressive. It's good numbers. We've got to confirm over time but I'm confident in what we're delivering. Now as far as the CMD, well, we'll -- I think we are going to deep dive on some of the drivers that show that the proof points of the way the strategy is delivering results.

So to give you more insights, more granularity in what the things that you do. And also, of course we're going to focus on some of the transformative actions that we are layering on top of the way we run the business. We also, of course, as you can imagine, have a deep dive on Akkodis because it's going to be on stage to explain his value creation plan and how confident he is to improve both the top line and the margins at Akkodis. So this is what we're going to talk about.

Your next question comes from the line of Suhasini Varanasi of Goldman Sachs.

Just a few for me, please. On perm trends, the declines have been easing for a couple of quarters now. Can you maybe give some color on whether you're seeing things stabilizing at these low levels? The second one, just to clarify again on working capital, the strength that we've seen in Q3, was there any timing effect that helped, especially on the payable side that is potentially going to unwind in Q4? And the last one on Akkodis restructuring, how much more should we expect on restructuring costs in the next quarter, please?

Thanks, Suhasini. I'll take the question on perm and also on working capital in Akkodis Germany.So on perm, yes, I mean we've been -- and it's an industry -- it's a global industry challenge, and we see it both in Adecco and LHH. Adecco is minus 7% on perm, LHH is minus 8%. So it's -- I wouldn't call it yet stabilized definitely. I think it reflects, fundamentally, it reflects the fact that there is little visibility for many of our clients and when you don't have visibility because of the -- let's be clear, the unpredictability of geopolitics and some of the tariffs and things like this, we -- clients do not dare to recruit permanently.

When you recruit permanently, it's because you're confident on the things that you have ahead of you. And because even in markets like the U.S. where it's relatively easy to recruit and lay off, you don't do that if you don't have visibility. So I think an interesting point is we see this momentum on perm coming up, and that says something about the mindset of our clients. Though we have seen a little bit of pickup in September, particularly in the U.S. so that there are pockets here and there in the finance sector, particularly where we have seen a pickup.

But it's still -- it's not massive. So I wouldn't call it a change in the trend. But of course, on the mid, long term, I'm confident that perm will come back because we will -- this is a market that we like. Companies, even with AI, they will need people and we need experts to recruit permanently. So that's -- this is a moment where we're a bit low on that business, but progressively, I believe it will recover but not now. Coram?

And I'll pick up on your other 2 questions. So on the working capital side. We had timing effect in Q3 '24, if you remember, which did work against us and then helped in Q4 '24, but there are no material timing effects in Q3 '25 that will unwind in Q4. This is a pretty clean set of numbers in cash terms in Q3. And I think to the point I made earlier, it's really all about tight working capital management. Payables, obviously, we mentioned, but also really ensuring that we manage that DSO in a best-in-class way.

On the one-off costs, we're forecasting EUR 25 million in Q4. Almost all of that will be related to Akkodis Germany, and it's a sign of how rapidly we are moving on this restructuring plan so that we can make sure that we get that business back to healthy run rate profitability by the end of the year.

Your next question comes from the line of Simon Van Oppen of Kepler Cheuvreux.

I have a question on the gross margin contribution from your adjacent services. We saw that trading upskilling and reskilling was up only 1% organically, but drove a 15 basis point margin improvement and if I'm correct, then this segment has a gross margin of roughly 60% historically. Could you please elaborate how this segment is contributing to this improvement in gross margin? And has the gross margin in this segment moves up? Or where do you see the long-term potential for the gross margin of this segment?

Sure. I will pick that one up. It's really important to understand the underlying growth number that you've highlighted, Simon, because there is actually an exit in that number of something called the U.S. Akkodis Academy. It's relatively small in the context of the group, but it does impact the growth rate in this segment. And on an underlying basis, training, upskilling and reskilling is up 28%, which I think gives you a real sense of how strong the growth is in EZRA, in GA and in the other parts of our business, which contribute training services, et cetera.

They do all -- and certainly, GA and EZRA have strong gross margins. This is very much a characteristic of this type of business. I think it gives you a real sense of how much value is created there. And because of the growth rates, because those businesses are becoming material in the context of the group top line they're having a material impact on the gross margin, and that's what's dropping through in Q3. I would expect those businesses to continue to contribute to positive gross margin.

Yes. And then to your point, Coram, I think I'm very pleased with the momentum we see in GA. GA is having great pipeline and great development in how we can accompany our clients on their own AI evolution, there is a lot of appetite for the type of services that GA provides in terms of how we can -- how we focus on specialties roles that are impacted by AI, and we can embark our clients on the journey. And in EZRA, I mean we are -- there is a significant market potential, and we are scaling this platform. It's really a platform business that we are scaling now with a really high gross margin.

So EZRA has become -- is extremely relevant in most of our client transformation, the cultural transformation, the AI transformation, so that's -- we have great expectations for the growth of that business moving forward with very, very healthy gross margins.

Your next question comes from the line of Rory McKenzie of UBS.

It's Rory here. First, I want to ask about the growth outlook for both career transition and the training businesses after a very strong quarter. Career transition, in particular, had been bumping up against high competitors for a while, and clearly, it's now jumped past of that. So is that new contracts ramping up or anything else one-off in there? And so should we expect similar growth in Q4 and into the start of next year? And then secondly, given the other announcements today, I feel like I have to ask Coram about trends in autos specifically.

So maybe when you look at the Adecco GBU and the strength this quarter, can you just talk about the performance of the global verticals like autos, logistics, manufacturing, and given all the contract wins you're kind of talking about, are there any commonalities in sectors you think you've targeted well or doing well in? And what lessons can you draw from that?

Thanks, Rory. So as far as the growth outlook, I think we have -- so we grew 9% this quarter in CT. We have a bit of a difference. U.S. is growing 7%. Rest of the World is growing 11%. So -- but it's still very high numbers. The pipeline is still quite healthy. And to your question, it's mostly new clients that we win. I mean we have a constant sales team on the field, remind you that we are the world leader by far. And we have an excellent reputation, the way we've also digitized our business the way we have now people on the platform, all the people that we accompany on platform with very efficient AI support, and that's a good thing.

And as I said, in training and scaling, GA is growing 45% -- 48%, EZRA is growing 59%. So are we going to sustain the super high level, I cannot promise, but definitely strong double-digit growth for EZRA and GA. No problem. And I would say for the moment, given the pipeline that we have in CT, I think we can expect modest growth, maybe mid-single digits or low-single digit. But let's be clear, we are on very high levels, and we've sustained these very high levels of revenue for quite some time. And now I pass over to Coram to speak about autos.

Thank you, Denis. and you did make me smile, Rory. So thank you. But to be clear, I would have been happy to answer a question on autos at any point during our discussions. So a couple of points on this. Firstly, when we look at Adecco, the growth is very broad-based. We have a number of sectors, which are all up across multiple countries. And I think it's a sign of the momentum that we have, the share that we're taking and the way, as you know, that we have been managing the business with agility to really identify growth wherever we can.

On autos, in Adecco represents about 8% of the Adecco GBU. It's up 10% year-on-year. And we see growth in France, Spain, U.S. and Germany. Germany is up 3%, which is encouraging for me, but partially offset by the one area, the one country where we do see a bit of pressure right now, which is Italy. I think the key to this is that cars are still being produced. There is obviously impact from all of the changes that are happening. But there are still models that are doing well. And our teams are very effective at identifying which manufacturers to partner with, which sites they should be targeting and in particular, therefore, which models have momentum and will require flexible labor.

And I think that is really strongly demonstrated by that Adecco Germany plus 3% number. And obviously, the other side of the autos coin for us is Akkodis. That is down 7% year-on-year. Interestingly and I'll focus on the 2 big markets, France is up, and we've had some really strong successes with a number of French manufacturers, which I think demonstrates the strength of the offering. In the short term, there continues to be pressure in Germany, as the German OEMs are reconfiguring their product plans and looking to move more of their R&D work of -- outsourced and offshored. And that's what gives us confidence that longer term, the demand for the Akkodis services is there. And France is a really good proof point for that because that expertise is required .

And in Japan, with the -- also Japanese carmakers, Akkodis is also growing nicely. So it's also a complement. And it's -- we said something about the that the problem is more focused on the German OEMs than the rest -- than the whole industry.

Now look, we manage these sectors, as you know, very forensically. But I think we're pleased with the progress that we see. And then the final comment I'll make is on logistics, which you flagged. That's around 9% of the Adecco GBU. It is down year-on-year, around 8%. That's almost a 1 basis point -- a 1 percentage point headwind to the group as a whole. This is the nature of this sector, so logistics partners manage demand very carefully. They go through periods where actually they increased the number of temps that they use.

They go through periods where they reduce and they in-source. Actually, if we look at the decade, there are some of our countries which are growing in logistics, for example, Italy and Japan. And there are several countries where right now, we're declining slightly, such as France, Germany and Spain. But that very much is the nature of that sector, and we're well positioned and it will be healthy in the medium to longer term. And my final point, please remember the broad-based nature of what's happening in Adecco. It's really important.

Your next question comes from the line of Michael Foeth of Vontobel.

I just have a follow-up on the training, reskilling and upskilling business. You said it's up 28% when you exclude the inorganic effect there. But still coaching skilling LHH is up 40% and EZRA up -- or G&A up 48%. So what's actually dragging the whole thing down. So I'm missing some part of that business. That would be the first one. The second question is regarding U.S. You said manufacturing is a driver. I was just wondering which type of manufacturing activities you're talking about and whether that's a trend that we should expect to continue in light of the whole repatriating manufacturing to the U.S. And then finally, if you can make a comment on the Akkodis defense exposure and how that's working?

So I think Coram will take the first question, and I'll take the other 2.

Yes. And very quickly on this one because I think we are very pleased with 28% underlying growth. And I think there is real strength in EZRA and GA and this offering as a whole. There are 2 pieces which are bringing that growth rate down from the 40% to 50% that you see in EZRA and GA. There is some more traditional coaching business which is effectively being substituted by EZRA.

That's an opportunity for us long term because the digital nature of EZRA's coaching platform actually expands the addressable market. And as we've talked about before, there is still a small piece of B2C business in general assembly, which we are sunsetting and in the short term, brings the growth rate down. So those are the 2 other pieces. But I think you'll agree the 28% underlying growth is a strong number.

And as far as the manufacturing is concerned, we're growing -- in the U.S., we're growing 11% on overall manufacturing, I would say, in the U.S., which is good. It's broad-based. I mean there is a lot of -- from the sort of mid-sized manufacturer that can serve a variety of industries to the larger piece. We exclude, if you want, in that category, we exclude the manufacturing that are purely sector-related like automotive or aerospace or others.

So far, we've seen -- it's a series of quarters where we've seen manufacturing relatively solid in the U.S. Is it related to ensuring I am not fully sure, we have seen some announcements, but before you build a new factory, or before you change your production strategy, it takes a bit of time. Probably over time, given the promises that we've heard from so many companies to increase their investments in the U.S., this will be supportive of our manufacturing business. I would say it's probably a bit early to link it to reshoring. It's just like we have, as I said, we have our salespeople really, really on the field, close to our clients and making sure that we fill every job requisition that we receive.

That's the point. It's -- the motto that we've had for several years now is I don't care whether the economy is good or bad, our markets are fragmented, if you are close to your clients, you can win share. And if you deliver faster than your competitor, then you gain share. And that's how we win. Now on the Akkodis defense, yes, we see momentum. It's -- the overall -- the aerospace and defense sector overall is growing 11% year-on-year. It's supported both by the aerospace dynamic and also with the pickup in defense, we say, I see it across the board, it's not yet -- I mean, the full investment that has been announced, for example, in Germany is not fully in place, but we see a pickup. And let's be clear, we are a key Tier 1 supplier for engineering services to all the major players, particularly in Europe and that puts us in a very good place. They also want to consolidate their Tier 1 list and we are in a very, very good place to continue to grow there.

Okay. Perfect. And thanks, Coram, for the very transparent and clear communication over the years and all the best.

Your next question comes from the line of Will Kirkness of Bernstein.

I just had 2 questions, please. Just on Akkodis, in terms of the U.S. and France, is there anything to do on cost there? Or is that just a case of waiting for end markets to get better to continue to improve? And then the second question was just a clarification on the 1.5x leverage target by the end of '27. And how we think about that with the new hybrid definition. So whether that -- when we start to think about return of surplus capital, just which calculation we use related to the hybrid?

I'll take the first one and then Coram will be super happy to talk about the second one. The -- yes, so U.S. and France, I mean, we are -- first of all, we are laser-focused on our cost base to ensure our competitiveness. We are also accelerating and Jo will talk about that at the CMD, accelerating our offshoring capacity to make sure that we provide the best possible service to our clients. There's a big need from our clients to -- for us to grow offshoring.

So that's good. We are -- so we are super focused on the cost base. France is back to growth, right, 1%, which is good. And the U.S., I mean, we have a great, great dynamic with -- in Consulting & Solutions. We grew 45%. And the tech staffing is improving. So it's sequentially, okay? So if you go back to North America in Akkodis was minus 9% in Q1, minus 4% in Q2 and now plus 1% year-on-year. So it is improving. We are still working on our cost base, it's too high. We are accelerating, particularly on the tech staffing, we're accelerating the way we use offshore to recruit faster and at more competitive costs. So this is what we're doing. I think I'm positive on both markets.

Let me pick up on the net debt-to-EBITDA question. Just to reiterate why we're doing this. We introduced the hybrid in 2021 as part of our capital structure. Obviously, the rating agencies from day 1 have given us the equity credit on 50% of it. We are in the process of refinancing, which very much reinforces the long-term nature of this instrument in our capital structure.

And therefore, it is the moment to align our reporting with rating agency methodology, it makes sense to do it. It is common practice, many companies do this. And as you can see in the press release, we've been very transparent in terms of the numbers, both before and after the change on the leverage ratio. The target remains at or below 1.5x net debt to EBITDA. And it's important to remember it is at or below and we are leaving it there for 2 reasons. One, it reflects our commitment to the investment grade credit rating. And obviously, that credit rating is assessed and calculated, including the hybrid, so it makes sense.

And as we know, for a business of this size and this nature, the 1.5x is a good point where you reach efficiency on cost of capital. So we will leave the target where it is. We've been transparent in the move on the reporting change and we are very committed to achieving that target.

Your next question comes from the line of James Rowland Clark of Barclays.

So just on the very strong North American performance, which is obviously well ahead of market growth rates at the moment. Does this sort of normalize back to market growth rates in the second half of next year or even lower on the tough comps? And I guess, could you just express your confidence that you could outperform the market on a sustainable basis there beyond that?

Just on the CFO change, I'd just like to know whether this maybe there's an opportunity for any slight changes to how to think about the financial guidance or use of capital in the future? And then finally, are you confident you can hold on to the broader cost savings, the structural cost savings in the business to deliver ahead of the market organically next year?

Thank you, James. So yes, I think the -- on North America, as I said, I mean, I don't think we'll grow 20% every quarter for the years to come. But yes, the objective is to always be ahead of the market. So are we going to normalize a little bit of growth, probably. Do we want to be ahead of the market? Yes, that's the objective. You know that the incentives of our executives and people are linked to doing better than the competition. So definitely, we will do -- we will push hard to always be ahead of the market.

Sometimes we get there, sometimes we don't, but that's the absolute focus of our teams, and it's not only North America, it's everywhere. As far as the CFO change, I mean we'll go in depth on this -- the financial strategy and the guidance in the Capital Markets Day, but you can expect continuity because this is what we've been told. I think we -- sorry, what we have been saying, you've understood that this was a very smooth transition. It was well prepared. And so that's the idea. It's all about the continuity. And yes, I mean the structural cost savings we will continue to be laser-focused on cost, both to achieve and to secure our gross margins.

So cost to serve is an absolute obsession because this is how we deliver our competitiveness. That's why and Christophe will talk about that in the CMD, that's why we've accelerated our talent supply chain delivery because that works. And of course, we are absolutely laser focused on the G&A and as you could see, we delivered on our promise to deliver the full savings, EUR 174 million net of inflation and we've kept that line really strictly. So moving forward, our G&A will be less than 3.5% of revenue, that's the sort of the line we've set and we'll stick to it.

There are no further questions at this time. And with that, I will turn the call back to Denis Machuel, CEO, for closing remarks. Please go ahead.

Thank you very much. And again, thanks again to all of you for having attended this call where we think we presented strong quarterly results and these results, they evidence further the strength of our execution. So we believe we are leading a recovery in our key markets. That's encouraging. While there is still a lot to do, all our turnaround plans are delivering according to our expectations. So that's encouraging for the future.

We are on track, as you understood, to meet our margin commitment for the full year, and that was very important for us. And so we are looking forward to seeing you at the CMD in London. I mentioned what we're going to talk about. And it's going to be also the opportunity for you to say goodbye to Coram and also to meet Valentina, they will be both on stage, as you can imagine, and also see with your eyes how we are living through a very smooth transition that we ensure full continuity.

So as you could hear, I'm confident in the future we're building a very strong group and we'll talk a lot about that in the CMD. See you there. Thank you so much. Have a great day.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Adecco Group Q2 2025 Results. [Operator Instructions]

I would now like to turn the call over to Benita Barretto, the Adecco Group Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Adecco Group's Q2 results conference call. I'm Benita Barretto, the group's Head of Investor Relations. And with me are the Adecco Group's CEO, Denis Machuel; and CFO, Coram Williams.

Before we begin, we want to draw your attention to the disclaimer on Slide 2. 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 Denis and the results report.

Thank you, Benita, and a warm welcome to all of you who joined the call today. Let's turn to Slide 3, which provides an overview of the quarter. We've increased market share with the group and Adecco ahead of key competitors by 205 and 130 basis points, respectively, this Q2. Revenue trends improved sequentially across all GBUs. Adecco returns to growth with revenues up 2% year-on-year on a trading day adjusted basis, led by Adecco Americas up 14% year-on-year and Adecco APAC, up 9% year-on-year. Gross profit was EUR 1.1 billion with a gross margin of 18.9%, a healthy result, reflecting current business mix and firm pricing. EBIDTA excluding one-offs, was EUR 141 million, with a 2.5% margin reflecting effective cost discipline, agile capacity management and the timing of income from the FESCO JV. Adjusted EPS was EUR 0.46 with lower one-off charges relative to the prior year period. Operating cash flow was EUR 81 million, driven by disciplined working capital management and a best-in-class DSO. Cash conversion remains strong at 98%.

Moving to Slide 4. The group's strategic execution continues to drive market share gains. On the left, we show relative revenue growth. In Q1, the group gained 30 basis point share and Adecco 130 basis points. In Q2, share gains increased to 205 basis points for the group with Adecco gaining a further 130 basis points. On the right, we show the improvement in year-on-year flexible volume trends across the Adecco GBU and in its 12 largest markets year-to-date. The group's sharpened execution positions us well in this improving market environment.

Let's turn to Slide 5 now, which highlights recent client wins. First, Adecco secured a significant win with a global OEM that needed support with its expansion into EV battery production. The client increased Adecco's share of wallet, thanks to our AI-driven recruiting tools, such as AI bots and Career Assistant, ability to deliver high-quality labor at scale and our real-time workforce analytics.

Second, LHH in Adecco won a large-scale permanent recruitment mandate from a global consulting firm. The client shows us for our proprietary cross-GBU candidate platform, speed in delivering top-quality candidates and proven industry expertise.

And third, Akkodis signed a multiyear contract with a leading French defense company. The clients sold to streamline suppliers while expanding its workforce. Our technical expertise and AI enhanced processes to accelerate innovation stood out.

In addition, our ability to scale capacity and implement a well-structured outsourcing model help cement our position as a preferred supplier. These wins demonstrate the group's commercial excellence and competitive edge as we more effectively lever our digital expertise, scale and breadth of offering, creating higher value add cross-GBU client solutions.

Let me now hand over to Coram who will provide details on the Q2 results.

Thank you, Denis, and good morning to everyone. Let's discuss the developments within each GBU, beginning with Adecco on Slide 6.

Adecco delivered EUR 4.6 billion in revenues, up 1.7% year-on-year on an organic trading days adjusted basis and sequentially improved by 3%. Flexible placement grew 1%. Year-on-year growth in volumes improved through the period, most notably in North America, France and Spain. Outsourcing revenues were up 7%, Permanent Placement was 9% lower and MSP grew 7%. SME revenues grew 4% year-on-year, and revenues from large and global customers also improved sequentially. Gross margin was healthy, reflecting lower Permanent Placement volumes, country mix in Flexible Placement and firm pricing. Productivity was broadly stable. Gross profit per selling FTE rose 0.5%, while selling FTEs reduced 3%. The EBITA margin at 3.2% was 20 basis points lower driven by G&A savings, agile capacity management and the timing of income from FESCO, which was received in Q1 this year and Q2 last year.

Let's move to Adecco at the segment level. Starting with Slide 7. In Adecco France, revenues improved from minus 9% in Q1 to minus 4% in Q2, outperforming the market. Food and beverage, retail and construction were robust. However, logistics, health care and auto continued to weigh. The EBITA margin of 3.5% reflects lower volumes and effective cost mitigation. Looking forward, a solid pipeline and further G&A savings will support profitable growth.

In Adecco EMEA, excluding France, revenues were flat, improving from minus 2% in Q1 with the segment gaining market share.

Looking at the larger markets, Iberia grew 10%, driven by strength in food and beverage, retail and manufacturing. Revenues in EEMENA and Benelux were both up 8%. Revenues in Italy were 2% lower, weighed by softness in autos and manufacturing, partly mitigated by strong logistics activity. In Germany and Austria, revenues were 5% lower. IT tech, manufacturing and logistics were challenged, and autos were strong. In the U.K. and Ireland, revenues were 6% lower muted demand in logistics and the public sector was partly mitigated by strong growth in consulting and food and beverage.

The segment's EBITA margin of 3% reflects the current client and solutions mix and strong SG&A discipline. Management continues to manage capacity in an agile way with modest head count increases in Iberia and EEMENA while rightsizing in slower markets, such as Germany and the U.K.

Let's turn to Slide 8. Adecco Americas revenues grew 14%, outperforming peers. North America rose 10%, evidencing continued traction with its turnaround plan. Recent client wins supported excellent growth in consumer goods and food and beverage, while manufacturing was strong.

In Latin America, revenues grew 21%, led by Colombia, Peru and Brazil, although Mexico remained soft. The region continued to grow strongly in consumer goods, food and beverage and manufacturing. America's EBITA margin of 1.7% reflects higher volumes, current business mix and strong SG&A discipline.

Last but not least, Adecco APAC revenues were 9% higher and ahead of the market. Revenues rose 7% in Japan, 17% in Asia and 13% in India. In Australia and New Zealand, revenues were 5% lower. The region's growth was led by IT tech, retail, consulting and the public sector. The EBITA margin of 4.6% predominantly reflects the timing of FESCO income. Excluding FESCO, the EBITA margin was 10 basis points lower with G&A savings offset by mix and investment in capacity to capture future growth opportunities.

Let's move to Akkodis on Slide 9. Akkodis revenues were 6% lower year-on-year on an organic constant currency basis. Consulting and Solutions revenues were 5% lower, with the business operating in relatively soft markets.

By segment, EMEA revenues were 8% lower. Germany declined 14% due to auto headwinds. France was resilient, 3% lower, but sequentially improved and ahead of the market with positive momentum in Aerospace and Defense, autos and energy. North America revenues were 4% lower, impacted by the ongoing downturn in tech staffing. However, Consulting & Solutions grew strongly with revenues up 30%. APAC revenues rose 1%, with Japan and China up 4%, supported by strong growth in IT tech and autos. Australia was 3% lower, including contribution from the recently acquired Barhead solutions. The EBITA margin of 1.6% was 330 basis points lower year-on-year. Sustained pressure in Germany impacted the margin by 140 basis points year-on-year and the ongoing downturn in tech staffing weighed by 70 basis points. The remaining movement was driven by lower volumes and trading days in consulting. Management is optimizing North American staffing operations and swiftly executing a turnaround in Germany to improve Akkodis' profitability. Excluding Germany, edits EBITA margin was 4.3%, and Akkodis' utilization rate was strong despite Germany at 91%.

Let's turn now to Slide 10, which provides a deep dive into Akkodis, Germany. Akkodis Germany's H1 performance has been significantly impacted by ongoing headwinds in auto, OEMs and Tier 1 suppliers have reduced or delayed projects as they transform. Akkodis' associated revenues have dropped by approximately 20% compared to precrisis levels. A good dynamic in other sectors, including rail, aerospace and defense is not yet able to outweigh the challenges in autos.

With market demand curtailed, utilization rates have moved to around 85%. Since consulting is a bench model, this has meaningfully impacted the profitability of the unit. In addition, SG&A levels are too high for current market dynamics. In response, the group has launched a EUR 40 million plus savings plan. Following constructive discussions with the works councils, head count has been adjusted, affecting approximately 450 consultants and employees. G&A savings actions have been taken and further savings are in the pipeline centered on real estate optimization. The plan is well underway. To date, a savings run rate of over EUR 30 million has been locked in. We estimate the turnaround plan will generate one-off restructuring charges of approximately EUR 40 million. mostly in Q3 2025 and including an initial charge of EUR 6 million booked in Q2.

Looking forward, these actions will enable Akkodis Germany to show improvement in the third quarter and return to healthy run rate profitability by the end of 2025. We also supporting improvement in the group's H2 margins.

Let's move on to LHH and Slide 11. Revenues in LHH were 1% lower year-on-year on an organic constant currency basis and 4% higher sequentially. Professional Recruitment Solutions revenues were 7% lower outperforming the market and improving sequentially, particularly in Japan. However, key markets, the U.S., France and U.K. remain soft. Recruitment Solutions gross profit was 8% lower, with permanent placement 6% lower. Productivity was flat with billing FTEs down 5%. The Career transition and mobility was very strong given a demanding comparison period. Revenues grew 5% with 10% growth outside the U.S. Its pipeline is strong. Coaching and skilling revenues were 12% higher. Ezra's revenues increased 39%, reaching a new record level with more scale generating healthy gross margin expansion. Its pipeline is strong, and the average contract win size is increasing. Revenues in general assembly reflect the exit of the B2C business. However, B2B was up 31%, with the business seeing strong take-up of its AI offerings.

LHH's EBITA margin of 9.5% and 20 basis points lower year-on-year, mainly reflect lower volumes in professional recruitment solutions, largely offset by SG&A discipline.

Let's turn now to Slide 12, which shows the group's gross margin drivers on a year-on-year basis. Gross margin was healthy at 18.9%, 50 basis points lower on a reported basis. Currency translation had a negative impact of 5 basis points. Flexible and permanent placement each reduced margin by 15 basis points. Outsourcing, consulting and other had a 20 basis point negative impact, mainly driven by challenges in Akkodis Germany, and training and reskilling had a positive impact of 5 basis points, mainly driven by Ezra.

Let's look at Slide 13 and the group's EBITA bridge. At 2.5%, the EBITA margin, excluding one-offs, was 60 basis points lower year-on-year, driven by a 5 basis point impact from currency translation, a 45 basis point impact from organic gross margin developments, a 10 basis point positive impact from operating leverage, including positive contribution from G&A savings and a 20 basis point negative impact from the timing of FESCO JV income. The group continues to manage selling and delivery, IT and G&A costs tightly. In Q2, SG&A expenses were 1% lower, with G&A down 5%. Selling FTEs were 5% lower, driving a 2% productivity uplift. Total FTEs were 4% lower year-on-year.

Let's turn to Slide 14 and the group's cash flow and financing structure. Cash conversion was strong at 98%, and DSO was flat year-on-year at 52.5 days, a best-in-class result. Cash flow from operating activities was EUR 81 million compared to EUR 162 million in the prior year period and in line with normal seasonality. The year-on-year difference in cash generation was driven by working capital absorption for growth. CapEx was EUR 29 million, and free cash flow was EUR 52 million. As a reminder, the group's cash flow generation is weighted to the second half. The quarter end net debt-to-EBITDA ratio was 3.6x, weighed by lower EBITDA. And Net debt was slightly below EUR 2.9 billion and EUR 90 million lower year-on-year, with a lower dividend distribution, partially offset by working capital absorption. The group remains firmly committed to bringing the net debt-to-EBITDA ratio to 1.5x or below by the end of 2027, absent any major macroeconomic or geopolitical disruption. We benefit from a robust financial structure with fixed interest rates on 80% of its outstanding gross debt, no financial covenants on any of our outstanding debt and strong liquidity resources, including an undrawn EUR 750 million revolving credit facility that was successfully renewed in the Q2 period. Given the year-to-date run rate of gross interest expenses, the group has today lowered FY '25 guidance to EUR 75 million from EUR 80 million. The group will also repay the CHF 225 million senior bond as it matures this Q4, bringing down gross debt levels.

Let's turn to Slide 15 and the group's outlook. Volumes improved through Q2, and in Q3 to date, positive momentum continues. For Q3, the group expects gross margin to rise sequentially in line with seasonality. It expects SG&A expenses, excluding one-offs, to be modestly lower sequentially. The group, therefore, expect profitability to improve from H1 levels as we progress through H2.

And with that, I'll hand back to Denis.

Thank you, Coram. Let me conclude with Slide 16 and key takeaways. In Q2, the group increased market share gains with solid margins and revenues improved sequentially across all the performance of Adecco U.S. improved significantly. And Adecco Akkodis Germany's turnaround is well underway. We expect this business to achieve healthy run rate profitability by year-end. Management remains laser-focused on managing capacity with agility to drive share gain and productivity in mixed markets, in addition to securing G&A savings. We look forward to meeting with you to discuss the group's priorities and progress at our Capital Markets Day on 26th of November in London after the Q3 results.

With that said, thank you for your attention, and let's open the lines for Q&A.

[Operator Instructions] Your first question comes from the line of Michael Foeth with Vontobel.

Two questions from my side. The first 1 is if you could provide an update on your AI venture with Salesforce, see where that stands and how you expect that to benefit your business going forward?

And the second question would be, if you could share your thoughts on the general trends that you see in European automotive market going into the second half of this year and into next year when talking to your clients? That will be it from my side.

Thank you. So I'll take both. The first thing around the joint venture that we have with Salesforce is we are really trade blazing the way we use Agent AI to create an absolute innovation in the way we help our clients strategize their workforce management when the workforce is becoming hybrid with humans and agents. And so what we are creating is a platform that's going to sit on the desk of the C-suite to really help with all the data, external data and internal client data to help the C-suite really look at where they can identify the business and put where teams can have to be upskilled and reskilled with AI, the efficiency that they can get, et cetera. So it's really a buddy to the C-suite to help them strategize their workforce. The product is under development, and we will have a live demo on Dreamforce in October in San Francisco and general availability from January '26 onwards. It's progressing super well. We are pushing the limits of technology there, but it's extremely promising. And that puts us really at the forefront of Agent AI.

On the second question regarding the automotive market. It's true that it has known better days. definitely, we see the biggest pressure is with our German -- the German OEMs. If we look at the impact on our results in Adecco, autos is only minus 1%, and Akkodis is minus 5% overall. Of course, in Germany, minus 14% because of the particular pressure on the German OEMs. I must say, some other OEMs are in a bit of a better shape because they have done the restructuring several years in a row. What we are here, however, particularly from the German carmakers, is that as they need to be more agile as they need to be more flexible, they will outsource more to the future. So even though, yes, we are suffering currently, particularly in Germany, in Akkodis, we know that we have excellent relationship with the big names, and they're asking us to stay by their side because they will need us in the future to outsource more because they need more flexibility.

Your next question comes from the line of Andy Grobler with BNP Paribas.

A couple from me, if I may. Firstly, just on margin progression. You had really good growth in APAC and EMEA ex France, within the Adecco GBU was flat, but margins were down in both why do you think you didn't -- and stripping out the FESCO stuff within APAC, why do you think you didn't get more operational leverage in those regions?

And then secondly, just going back to Slide 4. You talked about improved momentum. Can you just talk through the exit rates from Q2 and into early Q3, please?

I think Coram will take both.

Sure. Andy, absolutely understand the point on APAC and EMEA ex France, but you do have to dig into each of them. I think on APAC, as you rightly mentioned, almost all of the year-on-year reduction in margin is about the timing of FESCO. And the underlying reduction was only 10 bps. What we're doing in APAC is investing in capacity. And I have to say APAC has been something of a virtuous circle for us because it has consistently demonstrated growth consistently demonstrated market share and we make those investments, we get returns on them. So the operating leverage is there, but we've chosen to use it in Q2 to fuel further growth.

In terms of EMEA ex France, you can see there are lots of ups and downs in terms of where those territories are. They have all consistently delivered market share gains, which I think is important. There's a little bit of client mix on a temporary basis in there. But actually, the pressure on margins in the short term comes from perm, which, as you know, has been a pressure point, particularly in Europe. There's an ongoing downturn. And that does in the short term impact gross margin. There is good SG&A discipline across EMEA, but it's not at the moment enough to affect that term pressure. There's nothing structural going on there. It's a timing and cycle effect. And then in terms of exit rates, I mean, we have seen, as you know, very consistent improvements in the business from the start of the year. It's broad-based in deco. It's modest every month, but it continues. In Q2, we saw several weeks where the volumes were positive, particularly in the back end and July has been positive for us. So we do see continued momentum in the business, and we would expect that to continue.

Great. Can I just ask 1 follow-up, just on the APAC point. As the group returns to growth, hopefully through the back end of this year and into next year, do you expect to see kind of the normal drop-through rates? Or are you going to have to reinvest to fund that growth to the extent that we don't get the operational leverage that we may hope to?

Look, it's a good point. In APAC, I think the growth prospects are so strong that we've decided to reinvest. It's 1 of the areas where we consistently put head count in and we consistently get growth and very good margins. It is, as you know, a high-margin business for us. In terms of the wider drop-through, we've been running on a recovery ratio recently of about 43% as the business returns to growth in Adecco we would definitely expect to see the normal drop down of 50% and maybe even a little bit higher. And that is what underpins our confidence in H2 margins because that operating leverage will come through as the momentum continues, and it will drive profitability.

Your next question comes from the line of Remi Grenu with Morgan Stanley.

Three, if I may. So the first 1 is on Adecco France, so there's 1 to be a nice improvement there. Interested in terms of volumes, how this has evolved by end market and type of clients. And also, I think you previously mentioned that you had some headwinds with the top 3 clients in that country. So can you maybe make an update on that? And what role has played in the sequential recovery we in that country. So first question on France.

Then the second 1 is on Akkodis. So I think from the comments you were making on the margin ex Germany in both Q1 and Q2, it seems to me, and correct me if I'm knowing that the losses have been beat but you're now engaged in restructuring away. So would you expect Q2 to be the peak at Akkodis. So that's the second question.

And then the third 1 to elaborate a little bit on what Andy was asking on margin. Are you speaking to the comment that you think you can make it to 3% over the full year? And if so, I think that back of the envelope completion would probably imply mutual taking close or slightly below 4% in Q4 between 3.7% and 4%. Do you think it's a reasonable assumption for us to work on, and do you think that's achievable? Just trying to understand the organic growth and SG&A trajectory you're seeing for the rest of the year.

Thank you, Remi. I'll take the question on France and Coram will take the other 2 questions. So yes, we are pleased with the way our improvement plan is delivering in France. In Q1, we were at minus 9%. Q2, we are minus 4%. So still negative, but the market is even more negative. So for the first time since quite a long time, we've outperformed the market overall, 13 basis points, not massive, but it's a good trend. The pressure point in France is the permanent recruitment, which is down 11%. And you were talking about these large clients. Yes, I mean, there's still a pressure point on these large clients, particularly in logistics, in health care. And the last 2 ones that we were -- the last 3 winters, we are mentioning are not fundamentally supporting at the moment. But the food and beverage sector, the retail sector construction, that was a key focus for us. I mean, these are getting good traction. So we've seen a sequential improvement of the weekly volumes even July was a bit better than Q2. So -- and we have -- moving forward, we have some tailwinds that are linked to the -- some of the very nice client wins the pipeline is improving. So even though our top 3 clients are not really supporting the rest of the business is having momentum that shows that the action plan that we put in place, we deploy our hybrid delivery platform with discipline with our sensor delivery channel, we boost our SME business. We are accelerating on nuclear and construction. Our G&A savings are flowing nicely and we start to deploy also AI and all that together gives -- puts us, I think, in a much better place for the second half of the year in France. So I'm seeing Renew France positively now.

And let me pick up on Akkodis margins and the group margin for the full year. On Akkodis, as I mentioned in our opening remarks, it's a 330 basis point drop year-on-year. The main components of that are 140 basis points as a result of Germany, where the restructuring is already underway, 70 basis points from talent, which is primarily the U.S. which is -- we saw good competitive performance in talent, particularly in the U.S., but we do continue to rightsize because of the ongoing pressures in that business. And the remainder is really trading days in Q2 and lower volumes in a couple of our other consulting markets.

To your point about the trajectory for the rest of the year, I mean the biggest driver, obviously, of where we are in Q2 is Germany. And as we've mentioned, that savings plan is already being executed. It's EUR 40 million plus of savings run rate by the year-end, EUR 30 million of that is already locked in. And we would expect a modest benefit in Q3. So Germany margins will improve in Q3, and that will help Akkodis. And we would expect to see the full run rate come through in the Q4 margins, which would imply Germany being back to a mid-single-digit EBITA margin on a run rate basis by year-end. And we're assuming that on the basis of current revenues. So we are not expecting a pickup in terms of the top line in that business in the second half. So I think Q2 is the trough for a codes margins, and you will see a pickup in Q3 and strength in Q4.

On the group as a whole, to be clear, we are firmly committed to achieving the 3% EBITA margin floor on an annual basis, so in 2025. And there are a couple of ways that we get there. And these are the reasons why we are confident that margins and profitability will improve. As we discussed a couple of minutes ago, we've seen a consistent modest improvement in Flex volumes. That will drive operating leverage for us in the second half. We are tightly controlling G&A. So the savings that we've delivered last year continue to flow through the P&L. And as you can see from our numbers, we are pushing for more and identifying more. And we'll continue to manage selling capacity in an agile way, balancing share gains and productivity. And stepping back, if you put together the components of our guidance for Q3, it implies an improvement in margins from where we are. You can do the math, you'll get to north of 3%. And in Q4, we'd expect further operating leverage obviously, the full run rate benefit of the Akkodis Germany restructuring. You won't get to 4% in Q4, but there will be progress. from Q3 to Q4, and that's why we are committed to achieving that 3% EBITA margin floor.

Your next question comes from the line of Suhasini Varanasi with Goldman Sachs.

If you think about the gross margin that you reported in Q2, it was much lower than the expectations you gave at the time of 1Q results. Can you discuss what changed versus your expectations? And how we should think about Q3 evolution Secondly, on the SG&A, when you think about the modest improvement in SG&A sequentially in Q3. Can you break out how much benefit we can expect from Akkodis. I think you said more that benefit from the restructuring program in Q3. And therefore, how much should be the underlying change sequentially for Q2 that we should expect?

I think Coram will take both. Thank you, Suhasini.

Thank you. So on gross margin, in Q2. And we've given you the moving parts year-on-year. And just to remind you, obviously, there's flex mix, particularly the country mix. So the growth coming from slightly lower gross margin countries. There's the ongoing pressure in perm. And then obviously, there is short-term pressures in codes, Germany, which are flowing through on outsourcing, consulting and solutions.

Now we guided in Q2 on GM, we guided to reflect normal seasonality. So we were pointing to 30 bps lower from Q1 to Q2. To your point, we came in 50 bps lower. There's really 2 reasons for that: one, there was volatility in Q2, which we haven't anticipated at the beginning of the quarter, that was about 5 basis points. And then the rest is really that we got faster growth than we were expecting in Flex skewed towards the lower gross margin countries. And Flex as a result, was 15 basis points lower versus an expectation at the beginning of the quarter that we would be flat. So that's the movement in Q2. On Q3 is typically the strongest gross margin quarter for the industry. You get the benefit of the additional working hours, and we would expect to see that helping us on an seasonal basis from Q2 to Q3 sequentially. And we're pointing to 20 to 30 basis points of uplift.

To be clear, that is still down year-on-year. it's down 20 to 30 basis points. And the moving parts are FX, where we'd expect ongoing volatility, so let's say, 10 basis points negative. We expect that to be a little bit of further pressure on perm, about 10 basis points. Career transition, we think, will be flat Outsourcing, Consulting & Solutions, a small negative 10 to 20 basis points, driven by Akkodis Germany. Training, we think, will be up reflecting the benefits that we're seeing in that service line. And we'd expect Flex to be flat to 10 basis points up. And you may say, well, why would Flex be different? And the key point is that the mix is starting to evolve in our favor on Flex. You can see the sequential momentum that we've got, for example, in the U.S., which is a higher gross margin territory and a couple of our other territories where we're really starting to see that sequential momentum and that's what's going to be different in Q3.

On SG&A, in terms of the -- what we'd expect to happen in Q3. We're guiding for it to be lower modestly on a sequential basis. So we came in, in Q2 on EUR 954 million. There is always a little bit of seasonality between Q2 and Q3. It's usually about EUR 10 million. And then we'd expect a further modest sequential benefit, which will really come from sustained G&A discipline and continuing to manage our capacity in an agile way. As you know, on G&A, we've got a couple of territories where we continue to find savings. We've discussed these in previous calls, the U.S. and France, for example, Germany in Akkodis does help, but it's largely a Q4 benefit on SG&A rather than a Q3 benefit.

Your next question comes from the line of Simon LeChipre with Jefferies.

Yes. Three questions, please. First of all, on SG&A, I mean FTE came down by 4% year-on-year in the quarter, but SG&A was just down like 1%. So could you just explain the delta, please?

Secondly, as a follow-up to -- on the 3% EBIT margin target. I mean, it seems like you expect -- I mean you will need gross profit margin to be up year-over-year in Q4 to achieve close to 4% EBIT margin in the quarter. So I mean would you confirm this? And I mean, how do you pet to be able to manage to get such results?

And lastly, on cash. I mean, any view on free cash flow for H2? And where do you think net debt EBITDA could be by the end of this year?

Sure. So let me pick up on those points. I mean on the SG&A, you're right, the decrease in FTEs was 4% year-on-year, and there was a 1% reduction in SG&A. Remember, there is always a differential of wage and merit increases, and we saw this in Q1 as well. So you do not get all of the benefit of the FTE reduction on a year-on-year basis.

In terms of the 3% EBITA margin floor, I want to be clear, we're not expecting a significant uptick in gross margin in Q4. That's not the way that we get to the 3%. Just to repeat, we expect operating leverage on the back of the momentum that we're seeing in flex volumes. We are tightly controlling G&A, and we are managing capacity in an agile way. Plus, in Q4, you get the benefit of the swing on Akkodis Germany because of the run rate coming through on the savings plan. That's what gets you there. I would -- we are not banking on a structural change in gross margin in Q3 and Q4.

And then in terms of cash flow, I mean our cash flow is heavily H2 weighted. So we would expect a good cash flow in H2. We are currently managing working capital. You see that in our DSO figures, which are flat year-on-year, which is a best-in-class result. But we also need to recognize that the business does absorb working capital when it grows, you've seen that in the Q2 numbers, the differential between operating cash flow in Q2 this year and last year is all about that working capital absorption and the sequential momentum we see, for example, in Adecco, which is 3% between Q1 and Q2. And if revenue developments continue, then we'd expect to see a bit of working capital absorption in H2 as well. So we'll see good cash conversion. It probably won't be quite as strong an operating cash flow outcome as we saw in H2 of last year.

On leverage, I think it's really important to recognize that absolute net debt has come down, and it's come down by just under EUR 100 million year-on-year. We see the benefits of the reduced dividend flowing through, but it's partially offset in the short term by that working capital absorption as we grow. So the main impact on the leverage ratio, and it's always at its peak in Q2 actually driven by the rolling 12-month EBITDA, which has been lower than you might have expected as we've protected capacity to gain share. That strategy is working. You can see the share gains in the business. You can see the momentum on the top line, but it has had an impact on the leverage ratio in the short term. Now we will see a significant improvement in the leverage ratio in H2, and it will come from that H2 weighted cash flow, bringing down absolute net debt, and it will come from the margin improvement in H2 flowing through to the 12-month rolling EBITDA. And so both parts of the ratio will see a benefit. And remember, we'll also -- we mentioned this in the script, bring down gross debt levels when we repay the CHF 225 million senior bond in Q4.

Your next question comes from the line of Steve Woolf for Deutsche Bank.

Just on Akkodis. Can I just clarify whether the cost savings you're putting through now, are they incremental to the overall plan you had previously?

Secondly, if I go back to Slide 4 and look at the volume improvements in Flex, I just want just to add on to that, wages and then the pricing does that line stay about the same or presumably just improves that a little bit more?

And then finally, in Akkodis generally in the U.S. tech recruitment, what do you think you need to see out there to remove that blockage that seems to be when your feedback from companies as to why they're not hiring in this space, what generally is the feedback? Obviously, the 11 people go.

I'll take the first and the third one, and I think Coram will take the second one.

So with regards to the Akkodis Germany plant, yes, I mean we are doubling down on the restructuring plan. We had -- we were already pivoting the business before the German auto crisis. We were moving away from legacy into -- moving into digital engineering. We're moving delivery to offshore. But then the sort of Germany auto had this significant downturn. And the way we have articulated our -- the acceleration of our restructuring plan is on several things. First of all, we do a portfolio adjustments. We have a few small disposals, we talked about this very significant restructuring to manage the bench. So we are rightsizing the teams. It's about 12% of the team that is exiting. And we are also really accelerating the move to offshore to keep on our competitiveness. There's also a real estate point where we go, again, 1 step further than we had anticipated. And -- but at the same time, we're also pushing insist on that. We're also pushing into the diversification to capitalize on other sectors. Of course, we want to keep our great relationship with the carmakers because as I said earlier, they're going to be ready in some time for more outsourcing. But we believe that now we are -- we have a big potential. On the defense sector, we see some beginning of the momentum. We have all the big names there are our clients but we also see traction in energy, in a railway in life sciences.

So overall, yes, we are really extending the initial plan, go much deeper to, as Coram said, to have a very nice exit rate for this year. And both reduce the dependency on autos and then position Akkodis Germany for growth and definitely group accretive margins.

On your second question around wage inflation, pricing and volumes, wage inflation continues. It's modest. It's not at the same significant levels that we saw a couple of years ago, but it is there and it is modest, it is positive. And most importantly, we continue to see a positive spread between pay rates and bill rates in the Adecco business. So both of those are additive. As we've touched on in previous quarters, there is a country mix effect, which works a little bit against that. But it is good to see, and you can see it on that Slide 4, that the G12 actually has got more momentum right now than some of the smaller territories. So that's positive.

I think if I step back, on Q3, what we'd expect to see is modest volume momentum, a little bit of help from wage inflation. And remember also, there is a benefit on the comps in Q3 of around 200 basis points. So you should see decent growth in Q3.

And as far as the Akkodis U.S. piece, yes, well, actually, we've seen the overall tech staffing market is still soft. We see some signs of sequential improvements. We have a little bit of a pickup in job orders, and we are more or less performing in line with the market.

To your point, what needs to be true for the market to recover. We still a lot of -- there's still a lot of questions around the impact on AI, and we believe there is probably some impact on AI, particularly on entry-level software developers. It's hard to quantify at the moment. But definitely, when we see the large companies, large tech companies laying off some of their developers, we believe that, that has an impact. on that market. However, there's still -- I mean this market has a variety of profiles. It's still a massive market. So with -- once companies will have figured out what they really need in terms of technology and support and engineers when the market will probably regain some dynamic. At the same time, as Coram said earlier, we also rightsizing the business. I mean we also have a G&A savings plan there to make sure that we are -- we're lean and efficient. But we don't call it a recovery yet, even though we see a little bit of a job orders pick up.

And I must say -- sorry, I must say that at the same time, we have 2 indicators that tell us that it's still -- I mean there are still opportunities. Our Akkodis consulting business is growing super well. We grow at 30%. So that means higher value projects, higher value added to clients is irrelevant. We also see, and it's a sign that the market will not probably pick up soon is the career transition continues to be really quite strong, particularly with the tech profiles, particularly coming from the tech industry.

Your next question comes from the line of Rory McKenzie with UBS.

Rory here. Just 2 questions left, please. Firstly, on Adecco North America, obviously, up 10% is great in the market, which is still in small declines. Can you talk about the type of contract wins you've had to support that? Are they just big wins within the last 12 months that are still ramping up? Or is this growth within existing clients? And what's the pipeline ahead, basically, should we expect with us to stay at that level of growth into Q3 and Q4.

And then secondly, Ezra sounds like it's performing extremely well. What's the long-term thoughts about whether that business can go? And do you think it will always work best as part of LHH, for example?

So thanks, Rory. So on Adecco U.S. here, we're really pleased with the way the turnaround plan is delivering. Let me be clear. We are not done yet, okay? We still have a lot to go, profitability is not at the place we want it to be, but 10% growth in Q2, Q1 was at minus 2%. So there is momentum, and we believe that we can sustain at least for the next couple of quarters, this kind of growth. Despite perm being significantly declining, Perm is at minus 26%, and it's probably in line with what we hear in the market.

To your question, is large accounts are growing 24%. SMEs are growing 4%. So there's still growth in the small and medium business, but it's true that we've won large businesses in retail, in consumer goods, in food and beverage, which is pretty nice. So we will continue that momentum because that's delivering. We're still very focused on branch profitability we are cautious in branch openings. So we posed some of them just to make sure that we optimize our resources the pipeline of the large accounts is quite active. It's quite good. So of course, we need to transform, but that's pretty good. And we see a good momentum on our MSP business. We've been lagging behind for some -- for a long time, I think we're improving there. So that's -- yes, that's pretty good.

In terms of -- and you, of course, continue to focus on regiving our cost to serve, we are accelerating our near-shoring because that delivers competitiveness. As far as a, yes, we're super pleased. We're very encouraged by what Ezra is doing there this quarter, they've delivered again, record revenues, this pipeline is very strong. The deal size is also growing, which is good. The NPS is absolutely amazing at its very best, both from clients and for people that are being coached. So there's a lot there's a lot to do. Our gross margin is very healthy. We continue to fuel the development of that business because it's -- the market is expanding, clients are asking more and more for those type of services as well as reinventing coaching is democratizing and coaching. At the same time, it helps support cultural transformation. And that speaks very well to the C-suite. It goes much beyond the one-to-one coaching. It's one-to-one coal chain but in the direction that the C suite sets and that's super powerful. So it will -- could -- I'm convinced it will continue to be super successful and a very important pillar of LHH. And that really supports LHH strategy in terms of pinning its game, if I may say so.

Your next question comes from the line of Konrad Zomer with ODDO BHF.

I've got 2 questions, please. One on leverage and 1 on Germany. The 1 on leverage. We all understand that Q2 is the high point of the year and that it's going to come down in the second half. But the most important factor that is going to reduce it is improving profitability. You've got 2.5 years to go to get to that level of 1.5x. And it's not the current dividend. It's not the SG&A focus, but it's the underlying market improvement that you need in order to get there. So what's the underlying staffing market improvement that you've built in to your forecast of reducing leverage to less than 1.5x?

And my second question on Germany. The restructuring that you're going through in Germany in Akkodis the EUR 40 million and the 450 fewer consultants. Does that include your Adecco staffing business in Germany? Are you reducing the number of people that you place in Germany as well? Or is that like a completely separate entity?

I'll reply on the -- on Germany and then Coram will take your first question. It's only the restructuring in Germany only concerns Akkodis engineers. So it has no impact on Adecco. So it's very clear that it's the bench model that we are adjusting in [indiscernible].

And on the leverage point, Konrad, the -- I agree with your point that margin is important, but cash flow is also important. And I think 1 of the key points to note about where we are at Q2, as you say, it's always the seasonal peak. But right now, the calculation works against us, both in terms of H1 cash flow always being seasonally light and 12 months worth of rolling EBITDA, where we've been protecting capacity to gain share. And so we will see a significant improvement this year in the leverage ratio, which comes through the seasonally weighted cash flow, we're being super disciplined on working capital. You can see that in our DSO number and the margin improvement that we expect in the second half, which comes from operating leverage and real cost discipline on G&A and agile management of capacity.

On the 1.5x target, which is where we expect to be at or below that target by the end of 2027. We are very confident we can reach it. And as we've discussed in previous calls, there are 2 parts to how we get there. The first is modest momentum continues on the top line. It gives us operating leverage, and it really moves the margin. We've talked about the drop-through on this business. It's 50%. In the shorter term, it should be better than that given the way that we've been running the recovery ratio. But we know the business is geared nicely to drop through at least half of the improvement in gross profit through to EBITA. So that is obviously 1 way that we get to 1.5x by the end of 2027.

The second point is that if that momentum stalls or slows, then we will reduce capacity. We will reduce sales and delivery capacity. It's a EUR 2.5 billion cost base on an annual basis in order to get to the leverage ratio on the back of the current revenues, you need about a 15% reduction in that sales and delivery capacity. And remember, there's quite a lot of flexibility built into that cost base. So we have our own FTEs in sales and delivery that are on temp contract, it's about 10%. We also have a natural attrition rate. And so we can adjust that capacity very quickly if we need to. So 2 very clear parts. Our preference obviously would be for momentum on the top line, but we can get there in the event that, that stalls, and we do that by adjusting sales and delivery capacity.

Your next question comes from the line of Simon Van Oppen with Kepler Cheuvreux.

I want to dive a little bit deeper on Germany. So you mentioned in your deco that autos were strong in Germany in the second quarter, whereas in Akkodis, as you mentioned, there were strong headwinds. Can you please help me understand the dynamics that are currently at play in Germany, not only in autos, but the broader market as a whole? And what do you expect to see in the coming quarters given the confirmed U.S. EU trade deal and the federal budget set to be voted upon in the second half.

So with regards to -- yes, it's quite interesting to see the pressure points in Germany, in codes and not so much in deco. Well, actually, it says something about the fact that they're still producing cars and they need support for that. And it's a sign that they are starting to flex more on the production side. And hence, that's a good runway for Adecco. But on the way they think about the design their new cars on the way they designed their new automatic driving systems on their engineering part, moving, and as we know, they're sitting, the carmakers are exiting between [indiscernible] full electric vehicles, would they have hybrid models, et cetera. There's a lot of thinking and they definitely have to done the restructuring that many other carmakers have done in the world. And that explains why they are reducing volumes for codes at the moment because they are even shrinking their own R&D team. So that explains this paradox of Adecco having good traction in Akkodis being under pressure. But as I said, we believe that once they've done their own join mentor, if I may say so, they're -- and that's what they're telling us, they're going to outsource more.

As far as the EU/U.S. trade deal, we -- well, actually we've seen an interesting trend from the beginning of the year, we've talked about that earlier, permanent recruitment being really, really dropping from like February, March because of the uncertainty created by the U.S. government. And as much as we've seen perm dropping, particularly in the Western world, that means North America and Europe. I mean, we still see some good traction in LatAm and APAC, but these 2 regions have been really impacted. We've seen flex volumes improving, which says something about the confidence when you're -- and that's what we hear from our clients. When our clients are not confident, they don't recruit permanently. But because there is some activity detect temporary workers. So that has supported that. Now we believe that the trade deal has given a landing zone now. And definitely, we can -- clients will now reassess where to operate where would they have to move their supply chain or adjust, et cetera. So we believe that this is going to bring more visibility. And that's -- I think that it's good. It's good. So this is -- uncertainty is never good for the business. More visibility will help. Too early to know exactly clients are really figuring out there in this new playground, what options that they're going to take.

Your next question comes from the line of James Rowland Clark with Barclays.

Just 1 for me, please, on Germany. You've mentioned in the presentation about momentum in aerospace and defense. Obviously, there are some drags elsewhere in Germany. Could you help us with the sort of scale of the opportunity that you think is coming down the pipe, either discussions, the sort of scale of those or maybe even any wins you can indicate at this point? I'm just trying to get a sense of the size of the opportunity in defense versus your current group revenue exposure of about 5% to defense more broadly.

Yes. Let me give you at Akkodis some numbers. The auto is minus 5% year-on-year, but aerospace and defense overall was plus 15% year-on-year. And so that's pretty good. Energy is plus 21%. Life science is plus 15% year-on-year. So all that, of course, lower volumes than autos, but that's -- we have good traction. We have very strong relationship with the likes of Thales, Naval Group, in Metal, KDS, MTU, Kisen Group. So we start to see traction. We believe that the sector growth could be maybe around mid-single digit by the end of this year on lower volumes, of course, than autos, but it's going to get traction. The stimulus package in Germany has not yet given full impact, of course. It's going to take several quarters. But that puts us, I think, in a really positive mindset with regards to what's going to come up. And again, our clients expect us to be by their side as they have this order book growing nicely.

I will now turn the call back to Denis Machuel, CEO, for closing remarks.

Thank you, and thanks to all of you for having attended the call. Just in a nutshell, for the past quarters, we have seen a positive momentum, and we will focus on really sustaining it. As Coram said earlier, of course, we are managing our capacity in a very agile way. We will turn around Akkodis Germany in the same way as we are currently improving our performance in Adecco U.S. and Adecco in France. So fundamentally, I am very confident in the trajectory of the group. And during the CMD in November, we will tell you in more details what we do to execute our strategy, how our transformative actions are that we are layering on top of running our business are delivering and particularly how technology and AI are supporting our performance. So looking forward to interacting with you, of course, doing our Q3 results, but more fundamentally during the CMD. Thanks a lot for having being with us today.

Ladies and gentlemen, that concludes today's call. You may now disconnect.