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View All NewsKelly revenue up 2%, gross margin improves
Kelly Services Inc. (NASD: KELYA) revenue rose 2.2% in the first quarter, or 4.6% in constant currency, and gross margin improved to 17.3%.
First-quarter revenue in Kelly’s OCG segment rose by 13%, fueled by growth in business process outsourcing and contingent workforce outsourcing. Kelly OCG provides contingent workforce outsourcing, business process outsourcing, recruitment process outsourcing, independent contractor solutions and more.
| (US$ millions) | Q1 2016 | Q1 2015 | % change | % constant currency |
| Revenue | $1,349.1 | $1,320.6 | 2.2% | 4.6% |
| Gross profit | $232.7 | $220.3 | 5.6% | 7.7% |
| Gross margin | 17.3% | 16.7% | ||
| Net earnings | $11.2 | $3.7 | 200.9% |
In a conference call with analysts, executives also discussed the recently announced expansion of the joint venture with Temp Holdings in Asia. The venture will be based in Singapore, and the company is calling it the largest workforce solutions company in the Asia Pacific region. However, except for a small piece, OCG is not part of the venture.
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“The new joint venture, TS Kelly Asia Pacific, is expected to be the largest workforce solutions company in the Asia-Pacific region,” Kelly President and CEO Carl Camden said in a conference call with analysts. “By expanding its scope from four geographies to 12, the new [joint venture] is positioned to be the leading player in the region’s growing workforce solutions market. Our core OCG entities in the APAC region are not included in this transaction. Recruitment process outsourcing — RPO — and contingent workforce outsourcing — CWO — will not move to the JV and will continue to operate under the solo ownership of Kelly. We will continue to invest in OCG's capabilities in APAC as we strengthen our role as the talent supply chain provider to multinational companies in the region."
Revenue by segment
| (US$ millions) | Q1 2016 | Q1 2015 | % change | % constant currency |
| Americas Commercial | $648.6 | $641.4 | 1.1% | 3.1% |
| Americas Professional & Technical | $237.1 | $232.8 | 1.8% | 2.1% |
| EMEA Commerical | $175.5 | $178.3 | -1.6% | 2.9% |
| EMEA Professional & Technical | $41.6 | $40.3 | 3.1% | 7.3% |
| APAC Commerical | $82.8 | $85.6 | -3.3% | 4.8% |
| APAC Professional & Technical | $9.1 | $10.5 | -12.9% | -6.1% |
| OCG | $168.2 | $149.5 | 12.5% | 13.4% |
Revenue by geography
| (US$ millions) | Q1 2016 | Q1 2015 | % change | % constant currency |
| Americas | ||||
| United States | $934.7 | $883.0 | 5.9% | 5.9% |
| Canada | $34.5 | $42.7 | -19.0% | -10.6% |
| Mexico | $26.6 | $31.9 | -16.8% | 0.4% |
| Puerto Rico | $22.5 | $24.8 | -9.5% | -9.5% |
| Brazil | $10.0 | $13.9 | -28.2% | 5.4% |
| Europe, Middle East and Africa | ||||
| France | $56.5 | $56.4 | 0.2% | 2.6% |
| Switzerland | $46.6 | $48.1 | -3.1% | 0.9% |
| Portugal | $33.7 | $31.3 | 7.5% | 10.2% |
| United Kingdom | $23.6 | $23.6 | -0.1% | 6.0% |
| Germany | $15.4 | $13.4 | 15.1% | 18.0% |
| Russia | $14.0 | $18.2 | -23.1% | -9.1% |
| Italy | $13.4 | $12.5 | 7.1% | 9.1% |
| Norway | $7.6 | $9.4 | -18.8% | -9.2% |
| Other EMEA | $13.7 | $11.0 | 24.2% | 27.5% |
| Asia Pacific | ||||
| Singapore | $31.8 | $31.3 | 1.5% | 4.7% |
| Australia | $28.5 | $30.4 | -6.5% | 2.0% |
| Malaysia | $13.2 | $15.5 | -14.2% | -1.1% |
| New Zealand | $9.7 | $10.5 | -7.9% | 4.5% |
| Other Asia Pacific | $13.1 | $12.7 | 3.6% | 12.8% |
Gross margin by segment
| Q1 2016 | Q1 2015 | |
| Americas Commercial | 15.7% | 15.3% |
| Americas Professional & Technical | 17.6% | 16.7% |
| EMEA Commerical | 13.4% | 13.8% |
| EMEA Professional & Technical | 21.0% | 21.5% |
| APAC Commerical | 15.8% | 15.2% |
| APAC Professional & Technical | 27.4% | 27.5% |
| OCG | 25.1% | 23.8% |
Guidance
In the second quarter, revenue will be up 3% to 4% in constant currency, gross margin will rise 70 to 90 basis points. However, the guidance does not reflect the joint venture expansion
Share price and market cap
Shares in Kelly Services rose 3.34% to $0.61 in late morning trading. The company had a market cap of $730.52 million, according to Google.