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World – ManpowerGroup: Improving Q1 expected to continue

24 April 2014

International recruitment firm ManpowerGroup (MAN: NYSE) yesterday reported revenue for the first three months of 2014 of USD 4.9 billion, a rise of +3% in constant currency compared with USD 4.8 billion a year ago.

The company reported gross profit of USD 816.5 million, up by +3.6% in constant currency from USD 790.1 million in 2013. ManpowerGroup achieved an operating profit for the first quarter of USD 126.9 million, a year-on-year organic rise of +134.6% from USD 54.4 million in Q1 2013.

Jeffrey A. Joerres, ManpowerGroup Chairman and CEO, commented: "Despite the slow start in January, we are experiencing more positive revenue trends as we enter the second quarter in almost all of the major geographies. Growth in our Europe business improved to over +4% in constant currency in the quarter and exceeded +3% on an average daily basis. The work that our team did last year to simplify and re-calibrate our company is paying off as we were able to achieve strong flow through and operational leverage.”

Revenue derived from the Americas rose organically by +2.6% to USD 1.07 billion, despite dropping from USD 1.09 billion last year. Revenue from the United States rose by +2.1% on an organic basis to USD 720.5 million, up from USD 706.1 million last year. The inclement weather across much of the US during the period is estimated to have impacted revenue by -1%.

Revenue from ‘Other Americas’ rose by +3.6% in constant currency, despite dropping to USD 350.6 million in Q1 2014 from USD 386.9 million in Q1 2013. Demand in Mexico remains soft but revenue trends have been slowly improving. Argentina’s revenue growth of +12% was driven by inflation as billable hours fell by -6% during the quarter. Growth in the other countries in the Americas improved by +3% in constant currency with good growth from Brazil (+15%) and Colombia (+10%). 

Across Southern Europe revenue rose by +3.8% to USD 1.7 billion, up from USD 1.6 billion a year ago. France, the region’s largest market, representing 71% of Southern Europe revenue and 25% of company revenue, reported year-on-year organic growth of +2.3%, with revenue rising to USD 1.2 billion from USD 1.1 billion in 2013. Revenue from Italy for the first quarter was USD 274.7 million, a rise of +2.5% in constant currency from USD 257.9 million last year.

Revenue derived from ‘Other Southern Europe’ rose by +14.7% to USD 230 million during Q1 2014, up from USD 193.4 million in Q1 2013. Spain performed particularly well in this segment, reporting organic revenue growth for the period of +23%.

Revenue from Northern Europe rose by +4.6% in constant currency from USD 1.5 billion for the first three months of 2014, compared with USD 1.4 billion for the same period a year ago. In the UK, which represent 33% of the region, revenue accelerated by +9% in constant currency. Improvement was noted in the German market for both temporary and permanent recruitment, and the Netherlands reported revenue growth of +4%.  

ManpowerGroup’s Asia Pacific Middle East (APME) reported revenue of USD 573.7 million, a fall of -1.1% in constant currency from USD 632.5 million last year. The region, however, exceeded expectations as ManpowerGroup had forecast that revenue would fall by between -4% and -6% in constant currency during the period. The company’s operations in Japan represent 37% of the APME region revenue, which declined by -2% in constant currency. In other countries, revenue growth was mixed; with strong growth in India (+22%), Korea (+16%), and Taiwan (+11%) offset by revenue declines in China. The declines in China are attributed by the company to the change in staffing regulations in July last year which placed a number of restrictions on the number of temporary workers client companies could use and the length of assignments. 

The company’s workforce solutions business Right Management reported revenue of USD 73.3 million for the first quarter of 2014, a fall of -4% in constant currency from USD 76.6 million for the same period last year. The fall in revenue is attributed to ManpowerGroup’s cost recalibration efforts and improved delivery solutions which have had a dramatic impact on Right Management’s productivity. However, the company expects to see improving demand through its talent management offers as markets improve, and companies become more confident in investing in coaching and people development.

Looking forward, Mike Van Handel, Chief Financial Officer of ManpowerGroup commented: “Our revenue guidance anticipates that we will see a continuation of improving revenue trends and a modest acceleration from what we saw in the first quarter and in the month of March for that matter. We are forecasting constant currency revenue growth to range between +2% and +4% in the [second] quarter.”

“Within the operating segments, I expect low to mid-single-digit constant currency growth in the Americas and Southern Europe and Northern Europe and forecasting Asia-Pacific, Middle East to be about flat and Right Management to decline slightly,” he added.

In trading yesterday, the company’s share price rose by +7.1% to USD 83.41, a rise of +64.2% compared with a year ago. Based on its current share price, the company has a market value of USD 6.6 billion.