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Europe — Manpower easily beats expectations in Q2

22 July 2010

Manpower Inc. (MAN:NYQ), the world's third largest staffing firm, has announced second quarter and first half results for the period ended 30 June 2010.

Q2 revenues were up by +20.9% from $3.793 billion in 2009 to $4.585 billion in 2010. In constant currency, Q2 revenues were up by +23.7%. Q2 operating profit was up by +315% from $19 million in 2009 to $79.1 million in 2010. In constant currency, Q2 operating profit was up by +331%.


H1 revenues were up by +16.8% from $7.436 billion in 2009 to $8.684 billion in 2010. In constant currency, H1 revenues were up by +14.6%. H1 operating profit was up by +447.6% from $20.4 million in 2009 to $111.7 million in 2010. In constant currency, H1 operating profit was up by +441.4%.

The only negative in the results announcement was the decline in gross margins from 18.3% in Q2 2009 to 17.4% in Q2 2010. This was mostly due to a decline in Manpower's counter-cyclical outplacement business but also included a small reduction in the Company's temporary gross margin. Indications are that, despite improving demand, pricing remains competitive.

In France, Manpower's largest market, Q2 revenues were up by +14.2% from $1.1 billion in 2009 to $1.255 billion in 2010. In constant currency, Q2 revenues were up an impressive +22.6%. Demand increased broadly with particular strength in large key accounts and industrial staffing. Permanent placement fees were also strong due, to a large extent, to a contract with the French government employment agency (Pole Emploi). In France, Q2 Operating profit was up by +139.8% from $4.2 million in 2009 to $9.9 million in 2010. In constant currency, Q2 operating profit was up by +168.6%.

In Italy, Q2 revenues were up by +12.5% from $230.1 million in 2009 to $258.8 million in 2010. In constant currency, Q2 revenues were up by +20.6%. Operating profit was up by +99.5% from $6.8 million in 2009 to $13.5 million in 2010. In constant currency, Q2 operating profit was up by +115.3%.

In other EMEA countries, Q2 revenues were up by +14.2% from $1.255 billion in 2009 to $1.433 billion in 2010. In constant currency, Q2 revenues were up by +18% overall with increases of 15% in Belgium, 16% in the UK, 21% in the Nordics and 33% in Germany. In the Netherlands, Manpower’s revenues were stable. Q2 Operating profit was up from a loss of -$6.9 million in 2009 to an operating profit of $29.5 million in 2010.

In comments to the media and analysts, management suggested that the uncertain nature of the recovery was driving demand for temporary workers as employers were not yet confident enough to commit to increased permanent headcount.

Manpower Chairman and Chief Executive Officer, Jeffrey A. Joerres, said "the improving secular trends are continuing as companies across all major geographies are adding flexible talent to their organisations."

"We are constantly monitoring the economic trends and their potential uncertainties. However, we have not felt any slowdown as we enter the third quarter. Our investments in infrastructure, key initiatives, and an outstanding team were the prime accelerants to the strong performance in the second quarter. Germany, Sweden, UK, US, Canada, Mexico, France and Italy all had extremely strong revenue growth throughout the quarter."

"The integration of COMSYS (acquisition completed in 5 April 2010) into our US Professional staffing business is well ahead of schedule, and revenue growth is exceeding expectations."

"We are anticipating the third quarter of 2010 diluted earnings per share to be in the range of 41 Cents to 51 Cents, which includes an estimated unfavourable currency impact of 4 Cents." Management conservatively indicated that 3Q revenues will increase by 20%-22% year-on-year in constant currency as growth in the US and France could decelerate - even though no deceleration has been experienced in July.

At the close of NYSE trading yesterday Manpower's shares were up by +1.53% to $47.15.

 

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