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World – Manpower sees “steady” revenue decline as European slowdown continues

23 July 2012

Global staffing firm ManpowerGroup (MAN:NYQ) reported on Friday that market volatility led to sharp revenue declines across Europe with a stronger dollar lowering results during the second quarter of the year.

“The second quarter underscored our ability to execute well in a difficult environment. It was a quarter in which we experienced mild but steady declines in revenue throughout the quarter. Europe, which comprises 65% of our business, not surprisingly experienced the most decline in the quarter,” said ManpowerGroup Chairman and CEO, Jeffrey A. Joerres.

In a conference call on Friday, Mr Joerres also warned of slowing activity in the global markets. “We see this current downturn as quite different than what we experienced in 2008.There really is no major falloff but rather a slow decline of business that is holding true across all geographies at this time.”

Revenues in the quarter were US$ 5.2 billion, down -8.1% from a year ago. Gross profit also slumped by -10.4% to US$ 861.7 million while net earnings fell to US$ 41.0 million from US$ 72.7 million a year ago, seeing a reduction of -43.6%.

In Southern Europe, second-quarter revenue declined by -13.2% to US$ 1.9 billion from US$ 2.2 billion at the same time last year. France, the company’s largest single market, saw revenue fall by -13.2% to US$ 1.4 billion while in Italy revenue was down by -20.6% to US$ 274.0 million.

In Northern Europe, revenues decreased by -9.6% to US$1.4 billion, in Asia Pacific this remained more or less flat at US$ 662.9 million, and in the Americas the decline in quarterly revenue was relatively small at -1.6%, reaching US$ 1.2 billion.

In the quarter the gross profit margin came in at 16.6% “which is short of expectations and below prior year by 40 basis points,” CFO Mike Van Handel said. “The shortfall from expectations is attributed to lower recruitment revenues and a lower temporary recruitment gross margin in some European countries.

“Permanent recruitment fees showed good growth in the Americas albeit at a slightly lower rate than the first quarter but softened considerably in Europe with the contraction of 17% in Southern Europe and 8% in Northern Europe, both in constant currency,” Mr Van Handel said.

ManpowerGroup, ranked third in the world amongst staffing firms, also reported a reorganisation charge of US$18.7 million and legal settlement costs of US$10.0 million in the second quarter of the year.

The recruitment giant has around 3,900 offices in over 80 countries providing recruitment and assessment, training and development, career management, outsourcing and workforce consulting. Its portfolio of recruitment services includes permanent, temporary and contract recruitment of professionals, as well as administrative and industrial positions.

When reporting its second-quarter results on Friday, the company’s share price dropped by -6.3% to US$ 33.46, down -39.1% from a year ago and +5.2% above its 52-week low of US$ 31.81 set in September 2011. The firm has a market value of US$ 2.86 billion.

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