Daily News

View All News

World – Kelly Services Q4 earnings impaired by restructuring charge

30 January 2015

US-based recruitment firm Kelly Services (KELYA: NSDQ) reported revenue for the fourth quarter ending 31 December 2014 of USD 1.43 billion, up by 5.7% in constant currency (CC) from USD 1.39 billion during the same period last year. 

(US$m) Q4 2014 Q4 2013 Change (CC) FY 2014 FY 2013 Change (CC)
Revenue 1,425.0 1,385.8 +5.7% 5,562.7 5,413.1 +3.8%
Gross Profit 232.6 231.5 +3.4% 908.4 889.5 +3.2%
Earnings from Operations 2.6 9.6 N/A 21.9 53.3 N/A

The company recorded a restructuring charge of USD 6.2 million during Q4 2014, compared with a restructuring charge of USD 300,000 in Q4 2013. On an annual basis, Kelly Services incurred a restructuring charge of USD 12 million in 2014, but only reported a restructuring charge of USD 1.6 million and an asset impairment charge of USD 1.6 million in 2013.

Carl T. Camden, President and CEO of Kelly Services, stated: “The fourth quarter capped a year of significant investment at Kelly, and we’re pleased that our performance confirms those investments are gaining traction. With our new delivery models fully in place, we have begun capitalising on improved US market conditions and increased demand for specialised staffing. The strong results delivered by our OCG segment reflects our ongoing ability to also meet the growing demand for holistic talent management solutions, especially among our largest customers.”

Broken down geographically, Kelly Services’ largest market remains the United States, which accounted for 65.5% of total company revenue during Q4 2014. Every country across the Americas reported year-on-year constant currency revenue growth during Q4 2014. On an annual basis, the only country to report a constant currency decrease in revenue was Canada. 

Revenue (US$m) Q4 2014 Q4 2013 Change (CC) FY 2014 FY 2013 Change (CC)
United States 933.9 872.6 +7.0% 3,535.8 3,419.9 +3.4%
Canada 50.0 52.4 +3.2% 198.2 216.3 -1.9%
Mexico 36.7 33.9 +15.2% 139.0 133.3 +8.7%
Puerto Rico 26.6 24.6 +8.3% 105.0 98.2 +6.9%
Brazil 13.9 14.0 +7.6% 57.1 59.0 +5.8%
Total 1,061.1 997.5 +7.1% 4,035.1 3,926.7 +3.4%

Only three of the eight individual countries across Europe, the Middle East, and Africa (EMEA) reported constant currency revenue growth during Q4 2014, compared with the same period last year. The strongest growth was reported in Portugal (29.4%), followed by France (9.2%), and then Germany (4.2%).

The weakest performing countries were the United Kingdom (13%), Switzerland (12.7%), and Norway (9.8%), all in constant currency. 

The annual performance of the EMEA countries was slightly better, with five of the eight individual countries reporting year-on-year growth in 2014. The strongest constant currency growth was again reported in Portugal (38.5%), followed by France (8.3%), and Russia (2.2%).

The sharpest decline was reported in the United Kingdom (5.1%), followed by Norway (3.2%), and Switzerland (2.5%), all in constant currency.  

Revenue (US$m) Q4 2014 Q4 2013 Change (CC) FY 2014 FY 2013 Change (CC)
France 66.4 66.1 9.2% 268.6 248.1 +8.3%
Switzerland 57.8 70.3 -12.7% 253.5 255.9 -2.5%
Portugal 32.4 27.3 29.4% 124.8 90.3 +38.5%
United Kingdom 23.2 27.2 -13.0% 105.6 105.3 -5.1%
Russia 20.9 33.0 -9.3% 117.3 135.0 +2.2%
Germany 16.8 17.5 4.2% 67.5 66.8 +1.2%
Italy  13.9 15.3 -0.8% 60.2 58.9 +1.9%
Norway 11.9 14.8 -9.8% 55.5 61.1 -3.2%
Other EMEA 13.6 16.9 -12.0% 64.5 67.6 -4.4%
Total 256.9 288.4 -1.5% 1,117.5 1,089.0 +4.0%

Asia Pacific, Kelly Services’ smallest region, reported the strongest constant currency growth with an increase of 12.6% in Q4 2014 to USD 107 million, compared with the same period last year.

Of the four Asia Pacific countries included in the report, only New Zealand reported a constant currency decrease in revenue during Q4 2014. On an annual basis, Australia was the only country to report a constant currency decrease in revenue.  

Revenue (US$m) Q4 2014 Q4 2013 Change (CC) FY 2014 FY 2013 Change (CC)
Singapore 32.7 30.6 +10.8% 127.5 114.1 +13.2%
Australia 32.6 30.2 +16.8% 121.4 130.6 -0.7%
Malaysia 16.2 16.1 +5.4% 66.2 67.2 +2.4%
New Zealand 13.2 14.0 -0.6% 51.4 50.1 +1.4%
Other Asia Pacific 12.3 9.0 +37.5% 43.6 35.4 +30.2%
Total 1,061.1 997.5 +7.1% 410.1 397.4 +6.8%

Kelly Services operates three business segments, of which the Commercial and Professional & Technical staffing segments are broken down regionally. Kelly’s outsourcing and consulting business KellyOCG does not provide a geographical breakdown of results.  

Revenue (US$m) Q4 2014 Q4 2013 Change (CC) FY 2014 FY 2013 Change (CC)
Americas - Commercial 694.5 641.5 +8.3% 2,609.6 2,545.6 +3.4%
Americas - Professional 232.9 234.1 -0.2% 956.0 967.8 -1.0%
EMEA – Commercial 204.5 232.2 -2.4% 894.7 877.5 +3.5%
EMEA – Professional 44.8 48.0 2.7% 190.3 179.7 +6.4%
APAC - Commercial 91.3 87.3 +9.7% 351.8 344.1 +5.6%
APAC - Professional 11.2 9.3 +26.9 40.4 38.6 +9.0%
KellyOCG 164.7 148.5 +11.9 586.8 509.5 +15.7%

In trading yesterday, the company’s share price closed up 6.4% at USD 16.60, a decrease of -30% compared with last year. Based on its current share price, the company has a market value of USD 622.6 million.