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View All NewsKelly Services revenue edges up 1% in third quarter
Third-quarter revenue at Kelly Services (NASD: KELYA) edged up 1.0% with growth in all three segments amidst what the company called a “challenging talent environment” in the US. The increase was 1.9% in constant currency.
Kelly Services noted Americas revenue reflects continuing growth in Kelly Educational Staffing and PT specialties. In the company’s global talent solutions segment, higher revenue in outsourced solutions offset declines in centrally delivered staffing and payroll process outsourcing. And international staffing revenue growth continued, but at a slower pace.
| (US$ millions) | Q3 2018 | Q3 2017 | % change | % constant currency |
| Revenue | $1,342.4 | $1,328.8 | 1.0% | 1.9% |
| Gross profit | $239.1 | $230.7 | 3.6% | 4.5% |
| Gross margin | 17.8% | 17.4% | ||
| Net earnings | $33.1 | $23.0 | 43.9% |
The company noted a $15.8 million gain on its investment in Japan-based staffing provider Persol Holdings.
Revenue by segment
| (US$ millions) | Q3 2018 | Q3 2017 | % change | % constant currency |
| Americas staffing | $561.8 | $554.8 | 1.3% | 2.0% |
| Global talent solutions | $507.6 | $503.0 | 0.9% | 1.2% |
| International staffing | $277.2 | $275.6 | 0.6% | 2.8% |
Revenue by geography
| (US$ millions) | Q3 2018 | Q3 2017 | % change | % constant currency |
| Americas | ||||
| United States | $942.5 | $941.1 | 0.1% | 0.1% |
| Canada | $37.0 | $37.1 | -0.2% | 4.0% |
| Mexico | $32.3 | $32.9 | -1.9% | 4.3% |
| Puerto Rico | $28.2 | $15.9 | 77.0% | 77.0% |
| Brazil | $8.1 | $12.3 | -33.9% | -20.8% |
| Europe, Middle East and Africa | ||||
| France | $68.8 | $73.0 | -5.6% | -4.7% |
| Switzerland | $53.8 | $59.1 | -9.0% | -7.0% |
| Portugal | $48.2 | $46.0 | 4.5% | 5.5% |
| United Kingdom | $28.1 | $23.3 | 20.4% | 20.9% |
| Russia | $24.0 | $22.5 | 7.0% | 19.3% |
| Italy | $18.3 | $15.9 | 15.3% | 16.5% |
| Germany | $13.8 | $15.5 | -10.3% | -9.4% |
| Ireland | $11.3 | $8.3 | 36.7% | 38.2% |
| Norway | $8.8 | $8.9 | -1.7% | 1.8% |
| Other EMEA | $3.0 | $12.1 | 7.0% | 9.3% |
| Asia Pacific | ||||
| Total APAC | $6.2 | $4.9 | 28.9% | 37.5% |
Third-quarter gross margin rose in the Americas staffing global talent solutions segments, but narrowed in international staffing. Kelly noted Americas staffing’s gross profit rate was positively affected by lower employee-related costs, while international staffing’s rate was negatively affected by adjustments for employee-related costs and customer mix.
Gross margin by segment
| Q3 2018 | Q3 2017 | |
| Americas staffing | 18.9% | 17.8% |
| Global talent solutions | 19.2% | 18.5% |
| International staffing | 13.2% | 14.3% |
Kelly in September made an equity investment in Business Talent Group, a business-focused human cloud platform for on-demand consultants, experts and executives.
Quote
“The company performed well in the third quarter despite the continuing tight labor market,” said President and CEO George Corona. “Our teams are working on new and innovative ways to close the labor supply gap and we are taking the actions necessary to deliver on the bottom line while continuing to invest in technology for our future.”
Guidance
The company expects fourth-quarter revenue to be flat to up 1% year over year.
Share price and market cap
Kelly Services shares were down 3.02% to $24.05 at 12:08 p.m. Eastern time; the company had a market cap of $957.55 million, according to FT.com.