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Manpower revenue drops 32%, but stability seen

April 21 2009

Manpower Inc.'s (NYSE: MAN) first-quarter revenue fell 32.3% year-over-year amid a dismal global economy, and the company reported a $6.9 million reorganization charge for severances, office closures and consolidations. However, Manpower reported revenue stability in the U.S. and French markets over the last five weeks.

The company, one of the world's largest staffing firms, posted first-quarter revenue of $3.65 billion compared with $5.39 billion in the year-ago quarter for a decrease of 32.3%, or 21.8% on a constant currency basis.

Its U.S. first-quarter revenue fell 20.7% to $373.8 million from $471.5 million in the first quarter of 2008.

"In the U.S. and French markets, we have experienced revenue stability over the last five weeks, which is the longest string of revenue stability in the U.S. in four quarters," Chairman and CEO Jeffrey Joerres said. "The European geography, in general, has declined and continued to do so throughout the first quarter."

The company said first-quarter revenue at its Right Management outplacement division is up 43% on a constant currency basis with an operating profit of $29 million.

Manpower's overall gross margin improved to 18.4% from 18.0%.

The company said in a conference call with analysts it cut the number of offices since the third quarter by 350, leaving it with 4,200. And Manpower reported it reduced full-time equivalents by 13% or 4,500 people, also since the third quarter.

First-quarter net income dropped 96.9% to $2.3 million from $75.5 million in the same period in the previous year. The decrease was 97.1% on a constant currency basis.

The company reported it was required to pay a euro42 million fine from the French competition council last week despite the company is appealing the case. The fine is for alleged anti-competitive practices between March 2003 and November 2004. The case also includes Adecco SA and Vedior NV (now owned by Randstad Holding NV).

Joerres said Manpower expects to maintain profitability in the second quarter despite the economic environment.

Manpower estimated second-quarter revenue to be down 37% to 39% year-over-year, or 26% to 28% in constant currency, according to the conference call.

Manpower Inc. (NYSE: MAN)
For the first quarter ended March 31, 2009, compared with the same period in the previous year.
Revenue: $3.65 billion, -32.3%
Net income: $2.3 million, -96.9%

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