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View All NewsKelly revenue falls 0.7% in Q2, demand softens in Americas
Kelly Services Inc. (NASD: KELYA) revenue fell 0.7% in the second quarter, but was up 0.6% in constant currency. Americas revenue fell 0.1% in constant currency.
Gross margin improved to 16.8% from 16.1%
| (US$ millions) | Q2 2016 | Q2 2015 | % change | % constant currency |
| Revenue | $1,375.5 | $1,385.0 | -0.7% | 0.6% |
| Gross profit | $230.5 | $222.3 | 3.7% | 4.8% |
| Gross margin | 16.8% | 16.1% | ||
| Net earnings | $8.9 | $6.8 | 30.2% |
Quote
“We are pleased with Kelly’s ability to deliver strategic growth, improve gross profit, and increase shareholder value in the second quarter,” president and CEO Carl Camden said. “The finalization of our Joint Venture in APAC positions us for growth in staffing-related services while enabling us to accelerate investments in OCG, which remains a Kelly-owned entity.”
Kelly Services and Japanese staffing giant Temp Holdings closed on the TS Kelly Asia Pacific joint venture on July 4, forming what Kelly expects to be one of the region’s largest workforce solutions providers.
Referring to the apparent slow-down in US staffing demand facing the workforce solutions industry in the second quarter, Camden said, “Kelly responded quickly to flat top-line growth in the Americas by managing gross profit, adjusting our operating costs, and delivering solid leverage. We remain committed to increasing shareholder value by efficiently delivering the best workforce solutions for our customers around the world.”
Revenue by segment
| (US$ millions) | Q2 2016 | Q2 2015 | % change | % constant currency |
| Americas Commercial | $635.3 | $651.3 | -2.5% | -1.3% |
| Americas Professional & Technical | $241.6 | $246.2 | -1.9% | -1.7% |
| EMEA Commerical | $197.1 | $195.7 | 0.8% | 3.0% |
| EMEA Professional & Technical | $43.1 | $42.9 | 0.5% | 2.2% |
| APAC Commerical | $87.9 | $90.3 | -2.6% | 1.6% |
| APAC Professional & Technical | $9.2 | $10.3 | -11.4% | -7.8% |
| OCG* | $173.9 | $165.0 | 5.4% | 5.9% |
| *Services in Kelly's Outsourcing and Consulting Group (OCG) includes recruitment process outsouring (RPO), contingent workforce outsourcing (CWO), business process outsourcing (BPO), payroll process outsourcing (PPO), executive placement and outplacement. | ||||
Gross margin by segment
| Q2 2016 | Q2 2015 | |
| Americas Commercial | 15.6% | 14.7% |
| Americas Professional & Technical | 17.1% | 17.1% |
| EMEA Commerical | 13.8% | 13.7% |
| EMEA Professional & Technical | 20.0% | 21.2% |
| APAC Commerical | 11.7% | 12.4% |
| APAC Professional & Technical | 27.4% | 26.4% |
| OCG* | 24.6% | 21.6% |
| *Services in Kelly's Outsourcing and Consulting Group (OCG) includes recruitment process outsouring (RPO), contingent workforce outsourcing (CWO), business process outsourcing (BPO), payroll process outsourcing (PPO), executive placement and outplacement. | ||
Revenue by geography
| (US$ millions) | Q2 2016 | Q2 2015 | % change | % constant currency |
| Americas | ||||
| United States | $930.8 | $923.6 | 0.8% | 0.8% |
| Canada | $35.8 | $41.6 | -14.1% | -10.6% |
| Mexico | $25.4 | $32.0 | -20.2% | -5.5% |
| Puerto Rico | $22.5 | $26.6 | -15.3% | -15.3% |
| Brazil | $10.2 | $9.9 | 3.8% | 20.6% |
| Europe, Middle East and Africa | ||||
| France | $61.3 | $60.9 | 0.7% | -1.2% |
| Switzerland | $54.6 | $54.6 | -0.1% | 3.0% |
| Portugal | $38.7 | $33.9 | 14.5% | 12.1% |
| United Kingdom | $23.1 | $27.1 | -15.0% | -9.2% |
| Russia | $16.6 | $22.2 | -25.3% | -6.8% |
| Germany | $15.7 | $14.3 | 9.2% | 7.0% |
| Italy | $15.1 | $13.0 | 16.0% | 13.9% |
| Norway | $8.4 | $10.0 | -15.6% | -10.0% |
| Other EMEA | $14.8 | $10.3 | 44.3% | 42.2% |
| Asia Pacific | ||||
| Singapore | $33.0 | $33.0 | 0.2% | 1.3% |
| Australia | $32.1 | $32.9 | -2.3% | 2.0% |
| Malaysia | $14.5 | $15.9 | -9.6% | -0.8% |
| New Zealand | $9.5 | $10.3 | -7.7% | -1.9% |
| Other Asia Pacific | $13.4 | $12.9 | 3.7% | 8.6% |
Guidance
Kelly Services forecast third-quarter revenue will fall between 3% and 4% year over year in constant currency. Excluding the impact of the APAC joint venture, revenue in the company will rise 1.5% to 2.5% in constant currency.
Share price and market cap
Shares in Kelly Services fell 7.73% to $19.15 in late morning trading. The company had a market cap of $727.85 million, according to Yahoo.