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View All NewsWorld – Kelly Q1 revenue falls 4%, but up 3% adjusted for APAC joint venture
Kelly Services Inc. (NASD: KELYA) revenue fell 4.2% in constant currency in the first quarter and 4.4% as reported.
Revenue comparisons were unfavorably affected by the transfer of Asia Pacific staffing operations to the TS Kelly Asia Pacific joint venture in July 2016. First-quarter revenue rose 2.9% year over year in constant currency when adjusted for the Asia Pacific joint venture transaction, reflecting the growth in staffing business in the Americas and International, partially offset by a slight decline in global talent solutions revenue.
Results of operations include restructuring charges of $2.4 million.
| (USD millions) | Q1 2017 | Q1 2016 | Change | Constant Currency |
| Revenue | 1,289.7 | 1,349.1 | -4.4% | -4.2% |
| Gross Profit | 231.6 | 232.7 | -0.5% | -0.3% |
| Gross Margin | 18.0% | 17.2% | N/A | N/A |
| Net Earnings | 12.2 | 11.2 | 8.4% | N/A |
Kelly last month announced Carl Camden’s retirement as president and CEO effective 10 May, immediately prior to the company’s annual meeting of shareholders. Executive VP and COO George Corona has taken over as president and CEO. The two executives discussed future of the industry, challenges and more in a recent Staffing Industry Review article.
“It was a strong start to the year, and we’re pleased with Kelly’s performance,” Corona said. “We returned to top-line growth, delivered healthy operating earnings in each of our segments, and provided solid returns for our shareholders.” Commenting on the first quarter restructuring charges, Corona added, “Our operating structures are now fully aligned with how companies are choosing to access talent, and confirm our strategic approach to delivering accelerated growth.”
The TS Kelly Asia Pacific joint venture between Kelly and Japanese staffing firm, Temp Holdings, closed on 4 July 4 2016. Temp Holdings owns 51% and Kelly owns 49%. Kelly now accounts for its 49% interest as an Equity Method Investment. The joint venture comprises established businesses with approximately USD 500 million in revenue and 1,600 employees operating in China, Hong Kong, Taiwan, South Korea, Singapore, Malaysia, Australia, New Zealand, India, Indonesia, Thailand and Vietnam.
Revenue by Segment was broken down as follows:
| (USD millions) | Q1 2017 | Q1 2016 | Change | Constant Currency |
| Americas Staffing | 573.1 | 554.1 | 3.4% | 3.4% |
| Global Talent Solutions | 487.3 | 490.9 | -0.7 | -0.8% |
| International Staffing | 233.6 | 309.0 | -24.4% | -23.2% |
Revenue by Geography was broken down as follows:
| (USD millions) | Q1 2017 | Q1 2016 | Change | Constant Currency |
| Americas | ||||
| United States | 955.6 | 934.7 | 2.2% | 2.2% |
| Canada | 34.1 | 34.5 | -1.3% | -4.6% |
| Mexico | 23.8 | 26.6 | -10.3% | 0.7% |
| Puerto Rico | 17.7 | 22.5 | -21.4% | -21.4% |
| Brazil | 13.3 | 10.0 | 33.5% | 8.5% |
| EMEA | ||||
| France | 60.8 | 56.5 | 7.6% | 11.6% |
| Switzerland | 48.3 | 46.6 | 3.6% | 4.9% |
| Portugal | 36.3 | 33.7 | 7.8% | 11.9% |
| Russia | 22.8 | 14.0 | 63.0% | 29.2% |
| United Kingdom | 20.2 | 23.6 | -14.4% | -1.2% |
| Italy | 13.7 | 13.4 | 2.1% | 6.1% |
| Germany | 13.2 | 15.4 | -14.8% | -11.6% |
| Ireland | 7.7 | 5.0 | 55.7% | 61.5% |
| Norway | 7.6 | 7.6 | 0.5% | -1.5% |
| Other EMEA | 10.4 | 8.7 | 19.6% | 23.8% |
| Asia Pacific | ||||
| Total APAC | 4.2 | 96.3 | -95.6% | -95.7% |
Kelly Services forecasts revenue to be either flat or to fall by 1% for full-year 2017. Excluding the impact of the Asia Pacific joint venture in the first half of 2016, the company expects revenue to rise 3.0% to 4.0% in 2017.
Kelly Services Inc (KELYA:NSQ) set a new 52-week high during yesterday’s trading session when it reached $24.11. Over this period, the share price is up 20.21%. Shares in Kelly Services closed at $22.90, up 4.42% on the day. Based on its current share price the company had a market cap of $874.86 million.