Automatic Data Processing Inc.'s (ADP) fiscal first-quarter
earnings rose 2.6%, aided by cost cuts, though mounting
unemployment continued to trim the number of workers at clients'
businesses.
President and Chief Executive Gary C. Butler said he was
encouraged by the better-than-expected results. ADP's new business
sales at its employer services and human-resources outsourcing
segment, which were down 2% in the quarter, "are tracking close to
our expectations" and its dealer services businesses benefited from
the government's cash-for-clunkers program, he added.
Though rising unemployment was slow to hit payroll-processing
companies like ADP, it began cutting into the bottom line early
this year. ADP has been cutting costs and in July gave a cautious
view for its fiscal year. ADP, which also outsources
human-resources services, has seen a small uptick in its Cobra
business.
For the quarter ended Sept. 30, ADP reported a profit of $284.1
million, or 56 cents a share, up from $276.9 million, or 54 cents a
share, a year earlier. Revenue decreased 4% to $2.1 billion, with
half the drop due to currency changes.
Analysts polled by Thomson Reuters forecast earnings of 50 cents
a share on revenue of $2.05 billion.
Revenue at ADP's employer-services segment, by far its largest,
fell 3%. In the U.S., revenue declined 7% and employees on clients'
payrolls were down 6.5%. Pays per control -- an important measure
of profitability for business -- fell 6.5%.
The company raised the low end of its fiscal-year earnings
outlook and affirmed its revenue view.
Shares closed Tuesday at $40.65 and didn't trade premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com;