DOW JONES NEWSWIRES
Automatic Data Processing (ADP)'s fiscal second-quarter net
income rose 3.2% despite weakened sales conditions amid uncertainty
about the length and depth of the U.S. recession.
Shares of the largest company in the $70 billion global-payroll
processing market were up 6.7% at $39.10 in recent premarket
trading.
For the quarter ended Dec. 31, ADP reported net income increased
to $300.5 million, or 59 cents a share, from $291.2 million, or 55
a share, a year earlier.
Revenue rose 2.5% to $2.2 billion; the gain would have been
double that absent the strengthening dollar.
Analysts polled by Thomson Reuters were looking for earnings of
56 cents a share on revenue of $2.18 billion.
Revenue rose 6% at ADP's employer-services business, by far its
biggest business, which includes its payroll services. Pretax
earnings from continuing operations rose 13% despite the number of
employees on U.S. clients payrolls falling 0.6%. Global client
retention decreased 0.5% for the year amid price sensitivity and an
increasing number of clients going out of business.
At its dealer-services division - the only remaining nonpayroll
unit - revenue fell 1%, amid continued auto-dealership
consolidations and closings in the U.S. while earnings rose 1%.
ADP's human-resources outsourcing business saw revenue and
profit each rise 14% as the average number of worksite employees
paid increased 13% to 193,000.
ADP, which reiterated its fiscal-year outlook, last fall
expected it would be able to cut costs by shifting workers to more
inexpensive locations in the U.S. and abroad. It also viewed the
environment as an opportunity to look for acquisitions and expand
its core business, as opposed to diversifying.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front
page of today's most important business and market news, analysis
and commentary. You can use this link on the day this article is
published and the following day.