DOW JONES NEWSWIRES
Automatic Data Processing Inc.'s (ADP) fiscal second-quarter
earnings rose 5.1% amid a tax benefit and lower overhead costs,
while underlying profit beat analysts' estimates.
For the year, the company now expects earnings at the high end
of its prior view, with revenue flat to slightly down. Its prior
target was a decline of 1% to 2%.
The global payroll-processing and human-resources outsourcing
giant, with about 570,000 clients, late last year was growing
optimistic amid signs of economic stabilization that it can return
to revenue growth in the high-single digits on a percentage basis
when things turn up. Rising unemployment began cutting into ADP's
bottom line early last year, though the pace of job losses began to
slow by year's end. The company has been facing pricing pressure
from regional rivals as well as its own clients.
For the quarter ended Dec. 31, the company reported a profit of
$315.8 million, or 62 cents a share, up from $300.5 million, or 59
cents a share, a year earlier. The latest period included a tax
benefit of 2 cents a share. Revenue was flat at $2.2 billion,
helped by foreign-exchange rates.
Analysts polled by Thomson Reuters most recently forecast
earnings of 57 cents a share on revenue of $2.17 billion.
Gross margin fell to 44.1% from 46.1%, though that was more than
offset by a 9.2% drop in overhead costs.
Revenue at ADP's employer-services segment, by far its largest,
fell 2%. In the U.S., revenue declined 7% and employees on clients'
payrolls were down 5%.
Its smaller human-resources segment saw revenue increase 9% as
the number of employees on clients' payrolls were up 4% though
margins declined on higher benefits pass-through costs. Global
client retention declined slightly.
Shares closed Monday at $41.07 and didn't trade premarket. The
stock is up 12% in the past year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com