 Problems arose in the job agency's US business |
Global employment agency Adecco's shares have lost nearly half their value, diving more than 40% after it warned it may have accounting problems. Adecco delayed the publication of its 2003 full year accounts, originally planned for 4 February.
The Swiss-based firm said it had identified "material weaknesses in internal controls" in the group's North American operations.
Adecco has 28,000 staff in 68 countries ; its 2002 sales were worth $20.5bn.
Investigation underway
Investors deserted the stock fearing that Adecco may be on the verge of an major accounting scandal like that gripping Italian food giant Parmalat.
Adecco said it has launched an independent inquiry and appointed a lawyer from outside the group to report to the board's audit committee.
The control problems had emerged in Adecco Staffing in North America, the firm's statement said.
Adecco Staffing is the group's core business, generating 90% of its revenue.
The US market is also vital for Adecco, accounting for roughly one quarter of its total revenue.
The recruitment industry continues to face tough conditions.
Although the US economy is recovering from the 2001 recession, there is little sign of the pick up in growth being matched by an increase in job creation.
The slack global jobs market has put pressure on Adecco's profit margins. The group responded by implementing cost cuts in 2003.
Adecco says it is the world's biggest employment agency, with Adecco Staffing ranking first or second in 12 of the world's 13 most lucrative markets for the job placement services it provides.
Ripple effect on stocks
The firm said it was "not yet able to predict" when the 2003 audit would be completed.
Investment houses immediately downgraded Adecco's stock; both Bank Leu and DKW cut their recommendation on the stock to 'sell' from 'buy'.
"There was a panic reaction, people fear a scandal like Enron or Parmalat as soon as they hear the term 'accounting problems'," said investment analyst Thomas Veillet of Swiss firm Dynacapital.
Analysts also speculated that any problems would be likely to spread beyond the firm's US operations.
Adecco's statement hinted there might be more than one country involved.
It said it would be looking at the resolution of "possible accounting, control and compliance issues...in certain countries".
Adecco, whose stock is listed in Zurich and New York, has declined to expand on its statement, saying legal constraints prevent it from saying more.
Adecco's announcement led to falls in stock prices for other employment agencies; London-listed Hays and Michael Page International both fell on the news.
Adecco's shares were down 43.2% at 46.50 Swiss francs by late morning in Zurich. In New York-listed, the firm's shares shed 38% to $10.82 by midmorning there.
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People fear a scandal like Enron or Parmalat as soon as they hear the term accounting problems 
