Automatic Data Processing ( ADP) trimmed its guidance for its full-year earnings and revenue, citing economic headwinds that have impacted the employment market. The Roseland, N.J.-based payroll, benefits and outsourced business services provider said it now expects revenue to grow in the 1% to 2% range in 2009. When the company reported fiscal second-quarter earnings in February, ADP said it expected revenue growth to be in a range of 2% to 3%. ADP also said it expects earnings from continuing operations to be near the low end of it previously disclosed guidance of 10% to 14% growth in 2009. ADP attributed the lowered earnings forecast to a charge of $15 million, or 2 cents a share, stemming from an investment made in a money market fund. In February, the Primary Fund of the Reserve Fund said it established a special reserve to cover legal fees and potential claims, resulting in expected lower distributions to its shareholders than previously estimated. Based on its 2008 results and revised forecast, ADP would earn between $2.40 and $2.40 a share on revenue in a range of $8.86 billion to $8.96 billion. On average, analysts expect full-year earnings of $2.39 a share on revenue of $8.97 billion, according to Thomson Reuters. "ADP continues to grow despite difficult economic headwinds, albeit at a slower rate than previously anticipated," said ADP President and CEO Gary Butler in a statement. "Our revenue growth forecast for the year continues to be negatively impacted by about two percentage points due to our assumption of unfavorable foreign exchange rates continuing for the remainder of the fiscal year.''
The employer services business, which is ADP's largest unit, has been hit hard as clients continue to struggle in the weak economy. ADP now expects revenue growth of about 4%, down from its previous guidance of 5% growth. Butler did say that despite the difficult selling environment, ADP is set to deliver over $1 billion in new business sales worldwide in 2009. However, the company's new business sales are now expected to fall 13% from the $1.15 billion recorded in the previous fiscal year, compared with the old forecast for a decline of 10%. Shares of ADP were lately down $1, or 2.7%, to $35.43. Among other business service companies, Administaff ( ASF) was flat, while Paychex ( PAYX) was falling 4.4%.