ManpowerGroup Inc. (NYSE: MAN) revenue rose 5.2% in constant currency to USD 4.59 billion (€4.06 billion), despite edging up only 1.0% on a reported basis.

Revenues were lower than financial analysts’ consensus estimate but was better than expected in the US, France, and Asia-Pacific. In France, the company’s largest single market, revenue rose 5.5% in constant currency.

“The global environment continues to be uneven, with some countries continuing on their path of slow and steady growth and others struggling to gain traction”, said Chairman and CEO Jonas Prising.

The stronger US dollar relative to several foreign currencies compared to the prior year impacted financial results in the quarter.

“We are operating in a global economy that appears to have become slightly softer for a variety of reasons over the past 12 months, but with continued good growth opportunities in a number of markets”, Prising said in a conference call with analysts. “We believe that the global economy will continue to be uneven. And that is the environment that we are prepared for, both operationally and strategically.”

Prising continued: “Our belief is that Europe overall is still early in its economic cycle, and although it may be bumpy over the near term in some markets, we should still be able to see good growth opportunities as we move through the economic cycle. … Despite the difficulties for many countries in Asia/ Pacific and Latin America, we had good performances also in those regions, which show companies need flexibility to absorb market fluctuations in their respective businesses and industries, also when they are operating in a more difficult market.”

Despite moderate revenue growth, the company’s profitability improved partly due to better SG&A leverage. ManpowerGroup’s overall operating margin of 2.9% was up 20 basis points year-over-year and while gross margin was up 10 basis points year-over-year, to 16.9%.

Revenue by geography

• Northern Europe: In the first quarter, UK revenue fell 6% and the Nordics fell 4%, both in constant currency. However, Dutch and Belgian revenue rose 6% and 10% respectively in constant currency. German revenue rose 52% in constant currency, but the increase was only 4% on an organic basis.
• Southern Europe: In France, revenue rose 6% and Spanish revenue rose 17% — all in constant currency. Italian revenue edged down 1% in constant currency, a sharp reversal on previous quarters.
• Americas: US revenue represents the majority of Americas revenue, and revenue fell 3% in the first quarter as reported and in constant currency. Revenue in constant currency rose 11% in Mexico and 31% in Argentina.
• Asia Pacific Middle East: Japanese revenue rose 4% in constant currency in the first quarter. Australia/New Zealand revenue rose 30% in constant currency, but increased only 3% on an organic basis.

Guidance

ManpowerGroup forecasts total revenue to rise 3% to 5% year over year in the second quarter. The equivalent increase in constant currency would be in the region of 5% to 7%, so similar to, if not a little stronger than Q1. The company expects a gross margin of 17.1% to 17.3%.

Share price and market cap

Investors reacted cautiously to the lukewarm revenue growth and shares in ManpowerGroup fell 7.38% in after-hours trading yesterday to USD 79.08. The company had a market cap of USD 5.80 billion.