DOW JONES NEWSWIRES
Automatic Data Processing Inc. (ADP) fiscal fourth-quarter
earnings rose 51% on a tax gain, though mounting unemployment
continued to trim the number of workers at clients' businesses.
The payroll-processing and human-resources outsourcing company
also projected results for the new year below Wall Street
expectations. It expects earnings of $2.29 to $2.39 a share and a
revenue drop of 1%. Analysts polled by Thomson Reuters recently
were looking for $2.44 and a 1% revenue increase.
Though unemployment has been rising for some time, its effects
on payroll-processing companies like ADP were slower to appear. But
they cut into the bottom line in the prior quarter.
For the quarter ended June 30, the company reported a profit of
$352.8 million, or 70 cents share, up from $233.5 million, or 45
cents, a year earlier. Excluding items such as the tax gain,
earnings rose to 45 cents from 42 cents.
Revenue fell 5% to $2.11 billion, with foreign exchange reducing
the figure by 4 percentage points.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 45 cents on revenue of $2.12 billion.
Revenue at ADP's employer-services segment, by far its largest,
was flat. In the U.S., revenue fell 4% and employees on clients'
payrolls were down 5.7%. The figure turned down in the fiscal
second quarter. Pays per control - an important measure of
profitability for business - fell 5.7%.
Combined new business sold in its employer-services and
human-resources benefits outsourcing businesses tumbled 29%. The
results are combined as some clients use both services.
Its smaller human-resources outsourcing segment remained a
bright spot, as revenue rose 7%.
Shares closed at $37.82 on Wednesday and didn't trade premarket.
The stock is down 9% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com