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View All NewsWorld – ManpowerGroup revenue up 1% in constant currency, calls out softening market in Q3
ManpowerGroup (NYSE: MAN) cited a softening market environment, especially in Europe, in its third-quarter results released today. Total revenue at the US-based staffing giant rose 1.3% on a constant currency basis despite being down 0.8% on a reported basis. Gross margin narrowed, but net earnings rose.
Revenue in France, the company’s single largest market, was down 0.6% in constant currency. Third-quarter revenue also fell 3.9% on a constant-currency basis in the company’s Northern Europe segment, which includes the UK (flat), Germany (-14%), the Netherlands (-4%), Nordics (-3%), Belgium (-1%) and elsewhere. ManpowerGroup noted that it expects a challenging environment in Europe for the fourth quarter.
In the US, revenue fell 4.0%; however, the year-over-year decline was down from 4.6% in the second quarter and 6.8% in the first.
In Japan, revenue grew by 3% in constant currency while Australia lifted 6%. Other parts of the ‘APME region grew by 17% in constant currency.
| (USD millions) | Q3 2018 | Q3 2017 | % change | % constant currency |
| Revenue | 5,418.7 | 5,464.8 | -0.8% | 1.3% |
| Gross profit | 890.6 | 900.6 | -1.1% | 1.0% |
| Gross margin | 16.4% | 16.5% | N/A | N/A |
| Net earnings | 158.0 | 137.7 | 14.7% | 16.6% |
Revenue by Geography was broken down as follows.
| (USD millions) | Q3 2018 | Q3 2017 | % change | % constant currency |
| Americas | ||||
| United States | 633.2 | 659.9 | -4.0% | -4.0% |
| Other Americas | 406.8 | 401.6 | 1.3% | 11.7% |
| Total Americas | 1,040.0 | 1,061.5 | -2.0% | 1.9% |
| Southern Europe | ||||
| France | 1,460.6 | 1,481.7 | -1.4% | -0.6% |
| Italy | 410.2 | 386.1 | 6.3% | 7.2% |
| Other Southern Europe | 460.8 | 450.6 | 2.2% | 4.3% |
| Total Southern Europe | 2,331.6 | 2,318.4 | 0.6% | 1.7% |
| Northern Europe | 1,287.1 | 1,367.9 | -5.9% | -3.9% |
| Asia Pacific Middle East | 713.0 | 665.4 | 7.2% | 10.3% |
| Right Management | 47.0 | 51.6 | -8.9% | -7.5% |
At ManpowerGroup Solutions, which provides RPO and MSP, gross profit was up 8% in constant currency. Gross profit fell 8% in constant currency at Right Management.
ManpowerGroup gave a muted outlook as a tight US labour market continues to pinch revenue and political uncertainties in Europe cause employers to rethink short-term hiring plans.
New governments in Italy and Spain, upcoming elections in several European countries and the uncertainty surrounding Brexit has created concerns among employers greater than what had been expected, Chairman and CEO Jonas Prising said on a conference call with analysts. Despite those headwinds, Prising said the company remains confident in long-term prospects in Europe, where the company generates two-thirds of its revenue, and that the region is still behind the US in its current cycle of economic growth.
“Our third quarter results reflect a more challenging economic environment than we had anticipated, in particular for some countries in Europe,” Prising said. “While we are cautious on our outlook, we are confident in our ability to manage in a more uncertain environment.”
ManpowerGroup executives said on the call there has been some stabilisation in parts of Europe heading into the fourth quarter.
"We still feel that the labour markets are still strong in a number of these European markets and demand for talent remains good," Prising said.
ManpowerGroup expects fourth-quarter revenue to range from down 1% to up 1% in constant currency and provided the following guidance by geography (in constant currency):
- Americas: up 1% to 3%
- Southern Europe: flat to up 2%
- Northern Europe: down 3% to 5%
- Asia Pacific Middle East: up 3% to 5%
- Right Management: down 6% to 8%
On Friday, ManpowerGroup shares closed at $75.39, down 3.78% and 5.01% above its 52-week low of $71.79, set on 19 October 2018. Based on its current share price the company has a market value of $4.89 billion.