Adecco Group AG
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Ladies and gentlemen, welcome to the Q4 Results 2019 Analyst Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.At this time, it's my pleasure to hand over to Nicholas de la Grense, Head of Investor Relations. Please go ahead, sir.
Good morning, and welcome to Adecco Group's Q4 2019 Results Call. I'm joined today by Alain Dehaze, Group CEO; and Hans Ploos van Amstel, Group CFO.Before we start, please take a look at the disclaimer regarding forward-looking statements on Page 2. On today's agenda. First, Alain will discuss the highlights of the quarter. Hans will then review the group's financial performance, after which Alain will review progress on our transformation and innovation agendas. We'll then open the lines for Q&A.So with that, I hand over to Alain.
Thank you, Nick. And good morning, ladies and gentlemen, and welcome to fourth quarter results investor call.And I will start with the key highlights. In the fourth quarter, we delivered a strong performance in a challenging economic environment. While revenues were down 4% year-on-year, similar to the third quarter, we improved our gross margin by 20 basis points, the sixth consecutive quarter of improvement. Our focus on value-based pricing, delivering more value to our customers through digital tools and solutions and an enhanced business mix are having a positive impact. We also drove an improvement in EBITA margin, which was up 10 basis points year-on-year in reported terms and up 30 basis points underlying.GrowTogether productivity savings more than offset the negative impact from lower revenues. Cash flow was very good, with cash conversion at 93% and DSO down by 1 day year-on-year. On transform, we made excellent progress with the GrowTogether program, which underpinned the Q4 results. The program delivered total productivity savings of EUR 140 million in 2019, ahead of the target of the EUR 120 million. And we are on track to deliver on our commitment of EUR 250 million in 2020. The technology road map is accelerating with wider deployment of proven products such as the candidate app, chatbots and the integrated front-office solution. On our innovate agenda, we are pleased with the strong organic revenue growth at General Assembly, up 27% year-on-year, and the realization of ecosystem synergies. In the Digital Ventures, we have continued good growth, strong product development. And we are also leveraging the learnings across the rest of the group.Thanks to the solid full year results and proceeds from the Soliant divestment, we ended the year with a very strong balance sheet. Therefore, in line with our capital allocation policy, we intend to pay a dividend of CHF 2.50 per share; and also today announced a share buyback of EUR 600 million, to be completed during 2020 and 2021, this underlining our ability to deliver attractive returns to our shareholders while continuing to invest for profitable growth.Now I will hand over to Hans to take you through the financial performance in more detail.
Thanks, Alain. Let's start with the revenue. Revenue was down 4% on a trading days adjusted basis. This is in line with the decline we saw in the third quarter reflecting the continued economic uncertainty. Europe was minus 5%, which is slightly better than the 6% year-on-year decline in Q3. Remember that the slowdown in the European markets accelerated in the fourth quarter of 2018. North America was down 9%, driven by General Staffing where the typical seasonal ramp-up in activity was below the level of 2018. Japan remained strong. And in the Rest of World, we saw strong growth in Latin America.Looking at the country revenue results in more detail on Slide 8. France improved in Q4 and were back in line with the market. Activity weakened somewhat in December and in early 2020. The strikes had an impact. You will already have seen that in the latest market data which confirm lower growth going into 2020. Professional Staffing continued to deliver solid growth. In North America and U.K., General Staffing revenues were down 11%. The U.K. was very much Brexit related. In North America, the Q4 results were impacted by the challenging prior year comparison because of the strong seasonal demand in Q4 of 2018. The smaller peak demand in Q4 of 2019 was mainly linked to trade tariffs, which encouraged customers to restock inventories earlier in the year without needing the extra temporary workers. In North America and U.K. Professional Staffing, sales were slightly weaker than in the previous quarter, driven by the U.K. In the U.K., we saw a higher level of decline which continued in 2020 as Brexit-related uncertainty persisted and the new IR35 regulations started to impact client behavior. In the U.S., our IT and legal businesses remained challenging. We're making progress with the turnarounds and expect to see the results improve in the second half of 2020.In Germany, Austria and Switzerland, the rate of revenue decline improved slightly. Germany continues to be a very tough market impacted by the slowdown in industrial production and the continued weakness in the automotive sector. The deceleration in Switzerland reflects the softer economic environment in the main export markets impacting the manufacturing and transportation sectors. The results in the Benelux were in line with the market. In the Nordics, the results were impacted by lower demand in both the automotive and construction sector. In Italy, the revenue decline was in line with the third quarter results at minus 6%. We had another strong quarter in Japan growing market share, supported by a strong margin; Professional Staffing, including the Modis VSN business, growing double digits. Iberia growing at plus 6% had another strong quarter, outperforming the market. In the Rest of World, the Australia decline is impacted by our decision to focus more on value over volume, while the growth improved in Latin America.Career Transition and Talent Development saw continued strong growth. First, talent sales grew 6% and improved its market share. General Assembly delivered 27% growth in the quarter, building on the growth momentum of Q3.Let's now turn to the gross margin on Page 9. The reported gross margin increased 20 basis points. Currency and M&A had no impact this quarter. Hence, the organic gross margin was up 20 basis points. Temporary staffing had a negative 10 basis points. It is important to mention that we had a positive underlying price/mix effect of 10 basis points but had a negative 20 basis points from discrete items related to the changes in France, which I will explain when we discuss the EBITDA bridge. Permanent recruiting had a neutral impact. Career transition added 20 basis points. In other activities, the outsourcing business and GA added 10 basis points in gross margin.Let's now look at the EBITDA (sic) [ EBITA ] margin. The margin was up 10 basis points to 4.9%. Let me first explain the impact of the changes of the discrete items in our gross margin, which helped Q4 of 2018 and had a negative impact in Q4 2019.Social security and other accrual movements had a negative 60 basis points impact. 50 basis points are related to favorable items in Q4 of 2018, and 10 basis points are negative impacts in Q4 of 2019. The replacement of France CICE subsidies in 2018 had a 40 basis points positive impact in Q4 2019. Remember that, in December 2018, we didn't get any CICE, which is the main driver of the year-over-year impact. The combination of the two was a negative impact of 20 basis points in Q4 of 2019, so we delivered the 10 basis points margin improvement even after this negative impact. This means that we delivered an underlying improvement of around 30 basis points. Both GrowTogether and improved business mix more than offset the impact of the lower revenue.Now let's turn to the profitability for the key markets. France margin remained strong at 7.1%. The decline comes from the changes in the social security, other accruals and CICE, which we just explained before. These factors had a net negative impact on the margin of about 80 basis points in France versus Q4 of 2018. Hence, the underlying margin improved by 50 basis points, benefiting from GrowTogether productivity gains, improved business mix and a strong focus on value. The North America and U.K. General Staffing margin declined by 20 basis points year-over-year in reported terms. The revenue decline impacted the productivity, and we continued to invest in the Digital Ventures. In North America and U.K. Professional Staffing, the margin was down 30 basis points, with the decline driven by lower perm revenues and negative operating leverage.The EBITA margin in Germany, Austria and Switzerland declined by 90 basis points to around breakeven. The cost measures we took kept the productivity stable even after the revenue decline, the margin reduction coming from higher bench costs, with many clients temporary shutting down plants and reducing work time. Remember in Germany, all the temps are our permanent employees, so client shutdowns have a big impact. In the Benelux and Nordics, our margin improvement comes from our focus on higher-value portfolio and the cost actions. In Italy, we continue to deliver a strong profitability and are investing in head counts and IT to further strengthen our market position. In Iberia, the EBITDA (sic) [ EBITA ] margin decline mainly comes from the outsourcing operation in Spain, which we exited at the end of the quarter. Finally, in Career Transition and Talent Development, the improvement is coming from strong operating performance at LHH and reduced losses at General Assembly behind the improvement in the growth.Let's look at the SG&A in more detail on Slide 12. We reduced the SG&A in line with the decline in gross profits yet need to recognize that the revenue shortfall impacted the productivity. Gross profit per FTE was down 2% in Q4 and up 1% for the full year 2019, as GrowTogether supported the productivity improvement where we had lower revenue.Turning to the cash flow and the balance sheet on Slide 13. Cash flow was strong in the quarter. Days of sales outstanding are down 1 day to 52 days. Cash conversion increased to 93%. We had a working capital inflow linked to the lower DSO and the lower revenue, which improved the cash flow. Net debt-to-EBITDA reduced to 0.3x, supported by strong free cash flow and the divestment proceeds from Soliant.Our capital allocation policy remains clear. We return the excess cash flow to our shareholders at the end of every year. Excess cash is defined as net debt-to-EBITDA below 1x. We're currently in a strong excess cash position, with net debt-to-EBITDA at 0.3x. Therefore, we announced the EUR 600 million share buyback on top of a stable dividend of CHF 2.5 per share. Combined, this means a return of close to EUR 1 billion of cash to our shareholders.Coming to the outlook. In January 2020, revenues declined 5% year-on-year and trading days adjusted, showing a slight deterioration compared to Q4 2019. Volumes in February confirmed that this trend continues. We should not forget that the economic uncertainty remains high. And particularly, we're watching closely for potential disruption to supply chains and demand for temporary staffing linked to the coronavirus outbreak.In terms of the strategic agenda, we remain on track to deliver the total EUR 250 million GrowTogether commitment for 2020. Building on the momentum, we will continue to invest in our innovate agenda with the ventures. Therefore, we plan to continue to invest at the same level in 2020 or about EUR 65 million. We believe it remains important to continue investing in the ventures and our underlying technology to strengthen the business.In 2019, we showed that we continued to make the right investments while we improved the underlying EBITDA (sic) [ EBITA ] margin. This remains our objective, strengthening the underlying EBITDA margin even after continuing to invest in the ventures.And with this, I hand back to Alain for the update on the transformation and innovation.
Thank you, Hans. And let's start with transformation and our GrowTogether program. And let's recall GrowTogether is about strengthening the value propositions to drive sustained profitable growth. It's organized around the 3 key pillars that you see on the slide and is aimed at increasing productivity while also improving the value that we deliver to our customers.Since 2017, we have implemented key initiatives for our customers, candidates and colleagues: the candidate app that we have now in France, the U.S. and Germany; the integrated front-office solutions that we have in U.K., U.S., France and Spain; more than 10,000 colleagues trained on the PERFORM method across our front, middle and back office bringing a lean manufacturing approach to our service operations. All this is helping to drive higher customer satisfaction, which we measure with Net Promoter Score. And in 2019, our client Net Promoter Score improved by 8 points, a strong increase that was ahead of target.On the productivity side, we also made strong progress in 2019. Recall that in 2017, during the Capital Markets Day, we committed to deliver EUR 120 million of productivity savings in 2019, thanks to our transformation. In 2018, we delivered the first results, with EUR 50 million annual benefit. And in 2019, we continued, reaching EUR 140 million of productivity savings compared to 2016. And we are on track to deliver on our commitment for 2020, as well with a strong foundation to accelerate transformation in the years to come.GrowTogether delivers tangible improvements to our candidates and our clients. And on Slide 18, there is a real-world example from one of our largest on-site clients. And you can see how over the course of 3 years we have significantly improved our efficiency and simultaneously improved the service delivered to our clients, thanks to the increasing deployment of technology. For example, the ratio of applicants to placements has been reduced from 6:1 in 2017 to 3:1 in 2019. And this has a significant impact on the FTE productivity. At the same time, we are filling more client orders faster, resulting in high customer satisfaction. And this client confirmed the Adecco team as the best-performing supplier across its business combining best-in-class management and operational excellence with automation and technology. For 2020, we have further advances in the pipeline as we continue our transformation journey to bring more value to clients and candidates.Now a quick overview on progress related to the final part of our strategic agenda, innovate. General Assembly, our most mature venture, continued its organic expansion with a strong operational quarter across the board, 27% organic revenue growth in the fourth quarter, very strong demand for its differentiated online immersive offerings and enterprise bookings up strongly in the fourth quarter. So we are very pleased with the performance at General Assembly. In particular, we are pleased by the collaboration with all the group brands, which we talked about last quarter, combining the strengths of various brands to deliver for our clients and candidates.Looking at the digital ventures. Adia maintained its good growth momentum in Switzerland and successfully launched in the U.S. where it has developed leading end-to-end digital capabilities. Technology from Adia is also being leveraged to improve processes in the Adecco business, for example, relating to workforce scheduling and associate o-boarding. Vettery's innovative subscription-based permanent recruitment model continued to gain traction, with placements up 80% in 2019 and strong momentum on the enterprise side. YOSS is still in an early phase of development but with substantial market potential. Product development during 2019 was good, with several initiatives to accelerate progress in 2020. Overall, we are pleased to see the continued progress of our digital ventures and what they bring to our 360-degree HR offering.Coming now to the concluding messages. The fourth quarter was a quarter of strong execution and solid performance in a challenging market environment. We continue to invest in our digital transformation to fundamentally strengthen the business with GrowTogether, IT and our new ventures. And as we look to the year 2020, we are continuing to expand the GrowTogether program, with the technology road map accelerating. Having delivered on our commitment in 2019, we are on track to reach the EUR 250 million GrowTogether target for 2020; and there is significant opportunity beyond that as we build on the platform that we have established, especially to drive more value and secured relationships with our clients and candidates.Finally, our new business offerings are gaining traction with clients leveraging the combined strengths of our ecosystem, which is an increasingly valuable differentiator in the evolving world of work.And with this, I would kindly ask the operator to open the line for the questions.
[Operator Instructions] The first question comes from Bilal Aziz from UBS.
Just a few from my side, all on the margin actually. So firstly, just on the gross margin trend. Perhaps can you give us a bit more guidance there? How do you expect that to evolve in the future given now you'll be running tough comparatives on the pricing and mix perspective and any other moving pieces within that? Secondly, the margin improved a fair bit in Career Transition. Does that improvement signal the end of investments in General Assembly? And is it fair to assume profitability in 2020? Or is that a bit premature? And finally, can you talk us through the phasing of the EBIT margin improvement through 2020, yes, by the quarters, roughly?
That is good to fill up the rest of the hour, I will say, but let's start maybe with the core of your question. I give a small -- I think what you have been seeing us doing this year is that we improved the underlying margin while we continued to invest in the ventures. And that sets us up in this environment, which remains uncertain, right, that we have a solid foundation. I think our objective for next year is one thing. We will continue to invest in the ventures at the same level as this year. So while we're making more progress on General Assembly while it's growing, we will also invest in all the ventures and new innovations. So we'll continue to invest at around the 25 basis points. So that will stay the same next year. Then we will get GrowTogether benefits next year. So we expect next year that we want to improve continuously the underlying margin. We should not forget that we're exiting Soliant, which has a negative impact of around 15 basis points. So if we would be stable in 2020, that means we improve the underlying margin by around 15 basis points. I cannot give you an outlook because the revenue -- I have no crystal ball, but all things equal, our objective is to improve the underlying EBIT margin to offset that, Soliant. I can give you because you also asked on phasing...
Phasing, you will take it?
Yes, because I think that's important because I think some more people will ask that question as well. And I start with the gross margin in Q1. First, we have the divestiture of Soliant, which is 20 basis points down in Q1. The exchange rates, we assume, is around positive at around 10 basis points. And between temp margin and the Career Transition, we expect a positive gross margin trend of around 30, 50 basis points. We see that also the temp gross margin continues to be modestly positive, but take temp and Career Transition together, we have 30 to 40 basis points, meaning that our gross margin would go up 20 to 30 basis points.On SG&A, we will get continued benefits from GrowTogether. Where in Q1 we need to be a little prudent and careful is that we are going to implement systems in the first quarter. We're rolling out the new tools in France, Japan and Spain, so we go live with quite some of the developments of GrowTogether. We continue to invest in the ventures. The exchange rates will also have an impact on SG&A but in the opposite direction as the gross margin. So if you add that all up, we would be, underlying, about stable. And given where the revenue uncertainty is on Q1, we think that is up and all the things we're also investing in is a good start because we're not compromising on continuously rolling out the technology. And there's quite some things in Q1. So we're ending the year with a good foundation which sets us up next year to structurally improve the margin also in 2020. Thank you for the questions, Bilal.
The next question comes from the line from Chirag Vadhia from HSBC.
Just 2 questions from me. Firstly, on IR35, given the recent U.K. chancellor's comments on suggesting that tax officials won't be heavy handed for the first year on the rule changes, do you just see a little bit more leeway in the short term? And secondly, could you give a bit more color on the decline in General Staffing in North America, in particular surrounding the client commentary on inventory restocking?
Yes. When we look at -- I will start with the General Staffing decline. Now what we have seen in the fourth quarter of 2019 is that it has been influenced, let's say 50%, by the slower -- or the weaker peak we had in 2019 versus the peak of 2018. So it explain about 50% of this slowdown. And the other 50% is coming from the overall market slowdown, and you have seen that. And yes, we explain this slowdown with the timing of the restocking of the inventory that you had last year, also in the context of the trade war and from this had that influence. Now regarding the regulation in the U.K., because we have explained the slowdown of January, the minus 5 versus the minus 4 in the Q4, by the strikes in France but also by the new regulation IR35. And what we have seen is that, in fact, all clients have already acted regardless, I will say, the comments from finance minister. And we have seen our clients doing or putting either the contractors on permanent contract or putting them on the so-called pay as you earn, let's say, a framework, so that they could protect themselves from the potential obligation they would have to compensate or to pay the cost due for misclassification.
The next question comes from the line from Konrad Zomer from ABN AMRO.
A few questions. The first one, on the EUR 600 million share buyback. Can you maybe indicate to us, will that be a 50-50 split between this year and next year? Or will you be more opportunistic? My second question is just to confirm on what was said earlier. If you exclude the strong business in the U.S. General Staffing business of the fourth quarter last year, do you still look at an organic decline of about 5% to 6% in Q4? My last question is on GrowTogether. I think you've made excellent progress. I was just wondering. Is it easier to make that progress in times when your top line growth is negative?
Yes, 3 questions. So on the EUR 600 million, we will phase that over 2020 and 2021 and because of the dividend payment normally started a little later in 2020. So it's a little bit more skewed to 2021 but assumes 50-50 for the sake of simplicity. We will execute that program almost like on a daily basis because we won't be opportunistic on that. It's the form in which we give back the cash flow.If you look at the underlying trend, it is true that because of the comparison base, the U.S., right, had a little bit a tough comparison base, that the U.S. market is also down. And we have in January some other impacts. So I think the underlying exit rate we gave of that 5% is what we're seeing. It could be a little bit more better in the U.S., but you also have the France impact. So we haven't seen a material change in that. What I will say on GrowTogether and in general where the company is positioned -- and for sure, when you grow the business, driving productivity is easier because the same people can drive more revenue growth. In a declining environment, it's a little bit more challenging, but if you look what we have delivered in 2019 and in Q4, we continue to drive the productivity from GrowTogether, which is strengthening the margin in this trading environment. And I think where the company is well positioned going into 2020, that the GrowTogether program is very well embedded in the business. We have the PERFORM approach train 10,000 people so they can continue to drive better delivery and better productivity. The technology agenda is further along. We've built new integrated front-office systems. We have new candidate apps. We have digital time sheets we have on our own sites, new technology. It's now more about spreading it. For sure, we continue to build, but the EUR 250 million we need to deliver in total is all about spreading what we have built, and that's what we're going to do in 2020. So that's what I always say. We have a continued opportunity-rich margin because we are investing and we have the GrowTogether program.
The next question comes from Alain Oberhuber from MainFirst.
I have 2 questions from my side. The first is also regarding North America and probably in both sectors General Staffing and perm as well. So you already highlighted where you lost market share in the -- was it in perm and General Staffing? And the second question in that first is how would you like to tackle that and when could we see an improvement in North America? The second question is regarding France. Now the effect of the strike in January we'll have in 2020. Could you give us also a guidance there? And do you expect a strong improvement in Q2 versus Q1 in France?
Okay. On North America -- Alain -- I think we have to see the context, especially in the Professional Staffing. And if I look at the figures, in Q4 2018 for UNAM, including the U.K., but nevertheless U.S. is very important, we had 28% growth. So we have a minus 7% at the back of a very strong Q4 2018. That's the context. Now I see how we are developing now in perm, and I was speaking about the perm. I see how the year are -- has started in the U.S. And I'm quite confident that the perm remains a very attractive market and that we are performing well in this market. I don't see anything very particular. Then on your point regarding France, I didn't catch your question, sorry, Alain, regarding the Q2 versus the Q1...
Yes, exactly, regarding -- and because we had the strike, obviously, in France, which will have a negative impact. Do you expect the strong recovery coming through then in Q2?
You know that we have a limited visibility. And you -- I think that all the negotiation and the discussions around the reform are still ongoing. We will see how it will develop politically. And this outcome will also have consequences on potential strikes or not, and we have limited visibility on this. I cannot tell more that I can tell you now.
The next question comes from the line of George Gregory from Exane.
Three, if I may, please. Firstly, just regarding the better-than-expected run rate of GrowTogether savings. I'm just wondering. Was that driven by a faster-than-expected rollout of your tools? Or did you see improved adoption, improved benefit from the tools? And ultimately just wondering whether we could expect a lift to the EUR 250 million targeted savings for 2020. And linked to that, the second question really relates to savings beyond 2020. I presume that, by the end of this year, you won't have fully leveraged the benefits of your new chatbots, candidate app tools and so forth. Should we therefore see some benefits rolling into 2021 and beyond, please? And final question relates to, I think, an -- earlier comments on the margin trend for 2020. I think the suggestion was all things being equal. Do you mean the current revenue trajectory down 5%? Or rather do you mean flat year-over-year revenue or rather something in between, please?
Yes. Let me start with the first one. It is true that on GrowTogether, we're having good momentum, which we should be pleased with. So the things we're rolling out, and like you say, the adoption of the program is yielding on its results. And that's good. Now let's not forget, when we created the commitment, we were in the summer of 2017, so that we're still, I would say, high-level numbers. So I will just say it's good to see that the program is ahead, but to be that precise versus that point but -- is precisely working better as hard. I think the good thing is it's delivering on those objectives we set and move a little bit better. So that should put us on track to secure our commitment for EUR 250 million. And like you say, GrowTogether has done more than just building the EUR 250 million. We have embedded the PERFORM method into the business. And if you know something about lean manufacturing, this is about continuous improvement. The NPS activation program, which is starting to improve our NPS, will continue. And like you say, we will step further tools to develop, but we're also still building further the enhancements to our tools. So we laid a foundation to deliver the EUR 250 million, and I would say an approach which will give us continued benefits on the way we work with our customers, the way we build technology, that we will also improve the margin for the years to come. So I think that's the positive news of GrowTogether.On 2020, it's a very good question. I said "all things equal." So I said that, for the fiscal year, I think, in the fiscal year our revenue was a little less now than the minus 5. It was more like down minus 3. I would assume that the first half of the year, because of all the uncertainties you read, we have more uncertainty, but when I make that statement, I assume that the second half of the year because that deteriorated a little this year, that that would improve a little, so that you get to a -- and I'm not giving an outlook, but I'm giving you all things equal. For me, it deems all things equal versus this year, the full year.
The next question comes from Tom Sykes from Deutsche Bank.
Just on Italy and Japan. Obviously, there's lots of news there on incremental virus impacts. So are you seeing any impacts on your business there? And maybe also could you say what the perm-versus-temp skew is in Italy, Japan, please? Then also, just in Germany you're sort of annualizing, I suppose, the declines now. So what's happened to your like-for-like pricing in Germany, please, either at large accounts and small accounts? And then just on GA, could you maybe talk about the cash profile of that business versus the revenue recognition? Obviously, there does seem to be some sort of delay. There are different ways in which you can pay for your courses, and I was just wondering whether the cash profile matches the revenue recognition in that, please. And I suppose just the final follow-up would just be on your Q1 gross margin commentary. And should we assume therefore that perm is neutral to the gross margin when you were talking about the -- sorry, the reported gross margin, I guess, the target being up 20, 30 basis points, please?
Okay. Thank you, Tom, for your questions. And regarding Italy and Japan, at this stage, we don't have any impact or any material impact in our results. That's what I can tell you today. That's what I can tell you about Q4, about January and about the situation today. We will see how it will develop, but I can do this statement right now. More specifically on perm, I can even tell you that we had a very good month in perm in Italy in January. Coming to Germany, the pricing, we are extremely pricing disciplined in Germany whatever the customer segment, big to the large segment. And we have been able to renegotiate some of the large deal we had there. And we are extremely price sensitive -- price disciplined, and it will continue like this. And then for the cash profile of GA, I leave it to Hans. And if you want...
Yes, yes. Building on, I think, Germany, we continue to see the pricing moving in the right direction. I think where the EBIT margin and also some of the gross margin impact is the bench costs because we have quite -- we've had sometimes the factories shut down. So the gross margin is impacted by the bench costs. The cash profile between GA and the revenue recognition is a little different, but at the group level, it's not a material movement because sometimes indeed on the consumer business between how this revenue works -- but it's not a material one. On Q1 gross margin, your conclusion is right. You can assume with what I gave that the perm is stable.
Okay. And just because Italy is quite a reasonable-sized business for you, are you able to say how much business you actually have in Milan or quarantined areas? Or a little bit more visibility sort of Northern Italy versus Southern Italy, at all, please.
[ Of course ]. It's all very early days...
Exactly. I totally appreciate that. So I was just trying to -- yes.
Yes, yes. No, that's just the disclaimer. So we haven't seen an impact, yes, but we all know that the northern part of Italy is where the bulk of the economy is. And it's around 60% of the economy. And with that, it's a large part of our exposure. So we're watching this carefully. We haven't seen it yet, but we are carefully following the whole situation, for sure.
[Operator Instructions] The next question comes from Oscar Val from JPMorgan.
Yes. It's 2 questions on behalf of Sylvia Barker here at JPMorgan. The first one, on GrowTogether and the EUR 140 million you saw this year. Was that spread evenly across the group, or was it more weighted to some countries like France? And then is it fair to say that, next year, the benefits will be skewed to other countries, like Germany and the U.S., as you roll out kind of candidate apps and other digital tools? And then maybe the second question, on Adia. It's going very well in Switzerland. Could you comment on if you could see it expanding across Europe?
GrowTogether, indeed, was still skewed to certain markets. And you named one, which is France, but we also have benefits in countries like Italy and Spain and some of the U.S., but not sufficient given the revenue decline to fully offset it. And we are studying it. Like you say, Germany will come on the GrowTogether agenda, which is good. We know how to strengthen the margin, and Germany is a key market where we are focused to improve the margin. And we're rolling out also certain things in the U.S., like the candidate portal of France. So 2020 is more about spreading it. And then on the small markets, we'll also bring solutions into the business. So we're spreading it next year.
Yes. And on Adia, indeed we are very pleased with the progress on the product side. So that's very good. And for the moment, we -- geographically, we want to focus just on Switzerland and the U.S. markets. And as said, in this -- in Switzerland, we had a strong double-digit growth. We had very healthy gross margin, and we are establishing a path to the profitability. In the U.S. we have successful pilots of the products and the processes. We are moving also and beating our own targets on the -- what we call the 0 touch and the candidate acquisition costs. And we are now starting to ramp up the sales and so that we can get good traction for customers.
[Operator Instructions] Gentlemen, so far, there are no more questions.
Okay. Well, thank you, everyone, for joining the call today. And thanks for your questions. Especially, some of you, we'll see on the road show, and we look forward to that. Otherwise, we will next talk on the 5th of May with the Q1 results. Thank you very much.
Thank you.
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