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Adecco quarter two raises concerns about margin target

By Michael Shields and Rupert Pretterklieber

ZURICH (Reuters) - Adecco (ADEN.VX), the world's biggest staffing group, said it was relying on a pick up in revenue growth in the second half of the year to hit its 2015 margin target, sparking concern among some investors who sent its shares down more than 3 percent.

The Swiss group said on Tuesday its second-quarter net profit rose 22 percent to 177 million euros ($194 million), missing analysts' mean forecast of 182 million.

But the company kept its full-year goal of boosting its earnings before interest, taxes and amortisation (EBITA) margin above 5.5 percent.

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Chief Executive Patrick De Maeseneire -- reporting his last results before he hands over to Alain Dehaze, head of Adecco's flagship French business -- said hitting that goal would depend on an improvement in revenue growth.

"Given the trends in our business and the current economic outlook, and helped by an easier comparison base, we continue to expect such a pick-up," he said.

But some analysts were sceptical after the EBITA margin excluding one-off items rose 30 basis points year on year to 4.9 percent in the second quarter, with underlying revenue up 4 percent.

"Contrary to expectations, organic growth of 4 percent in local currencies did not accelerate in Q2, and lags developments at rivals," said ZKB analyst Marco Strittmatter, noting Randstad (RAND.AS) and ManpowerGroup (MAN.N) had grown over 6 percent.

Adecco needs a second-half margin above 6.2 percent to hit its goal, which Strittmatter called "a very sporting target".

The company's EBITA margin was 4.8 percent in 2014.

Its stock fell 3.2 percent to 79.60 Swiss francs by 0818 GMT.

Adecco said revenues in France and Germany returned to growth as the industrial sector picked up and accelerated in the Benelux countries and Italy. Iberia and emerging markets including eastern Europe and India saw double-digit growth.

But slowing growth in North America, hit by the energy sector in Canada, partly offset improved conditions in Europe, where Adecco generates two-thirds of its business.

De Maeseneire told Reuters he thought the crucial French market was set to accelerate in the quarters ahead, while the U.S. market would not turn negative.

Adecco said Germany and Benelux would expand more, fast-growing Italy would tick up, Iberia and Japan would see slight growth and emerging markets would gain a little.

Randstad (RAND.AS), the world's second-biggest staffing group, had a second-quarter earnings beat.

(Additional reporting by Brenna Hughes Neghaiwi; Editing by John Miller and mark Potter)