By Victoria Stilwell
Automatic Data Processing Inc.'s (ADP) fiscal fourth-quarter
profit rose 6.9% as the payroll-service firm's employer-services
segment improved revenue and new business sales grew by double
digits.
Looking ahead to fiscal 2013, the company expects per-share
earnings growth of 5% to 7% from 2012 on revenue growth of 5% to
7%. Analysts polled by Thomson Reuters are looking for 9% and 8%
growth, respectively. ADP expects employer services revenue to grow
6% to 7%, and sees 8% to 10% growth in new business sales for
employer services and professional employer organizations.
The company said it expects 2013 year-over-year comparisons to
be negatively affected by foreign exchange rates, an expected lower
average yield on the client funds portfolio and other items.
Recognized for its stamp on worker paychecks, ADP's business
stretches from payroll management to employee benefits
administration as well as the outsourcing of human resources tasks.
The company has said its strongest growth has come from the smaller
end of the market, as many such firms lack a formal head of human
resources or need extra help with compliance duties.
For the quarter ended June 30, ADP reported a profit of $258.4
million, or 53 cents a share, up from a year-earlier profit of
$241.8 million, or 48 cents a share. Total revenue rose 5.2% to
$2.64 billion.
Analysts surveyed by Thomson Reuters recently expected earnings
of 53 cents a share on revenue of $2.66 billion.
Revenue at the company's employer-services segment--its biggest
by sales-- improved 6.7% to $1.88 billion. The number of employees
on ADP's clients' payrolls in the U.S. rose 3.2%, as measured on a
same-store sales basis.
Client retention declined 0.2 percentage points for the fourth
quarter.
New-business sales for employer services and professional
employer organizations services--a key metric for ADP--grew 20% in
the fourth quarter from the year before.
Shares closed Tuesday at $56.55 and were inactive premarket. The
stock is up 12% in the past 12 months.
Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com
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