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World - ManpowerGroup achieves strong operational leverage in Q2 2011

22 July 2011

Revenues were up by +23.6% from $4.58 billion in Q2 2010 to $5.66 billion in Q2 2011 at ManpowerGroup (NYSE:MAN), the world's third-largest staffing firm. In constant currency revenues were up by +12%. The results exceeded analyst expectations.

Interim results for the three months ended 30 June 2011 reveal that gross profit was up by +20.7% from $797 million in Q2 2010 to $962.2 million in Q2 2011. In constant currency gross profit was up by +9.8%. Gross margins declined from 17.4% in Q2 2010 to 17.0% in Q2 2011, but this was largely due to weakness in the outplacement market and mix effects. The temporary gross margin actually improved by +0.1%.

Despite the strong growth in revenue, SG&A only increased by 3.5% providing the company with very strong operational leverage. Operating profit was up by +90.6% from $79.1 million in Q2 2010 to $150.8 million in Q2 2011.

Net earnings were up by +123.1% from $32.7 million in Q2 2010 to $72.7 million in Q2 2011.

In the United States revenues were up by +9% from $726.6 million in Q2 2010 to $791.6 million in Q2 2011. Operating profit was up by +85% from $14.7 million in Q2 2010 to $27.2 million Euro in Q2 2011.

In the other Americas revenues were up by +23.9% from $306.1 million in Q2 2010 to $379.4 million in Q2 2011. In constant currency revenues were up by +18.5%. Operating profit was up by +42.3% from $8.7 million in Q2 2010 to $12.3 million Euro in Q2 2011. In constant currency operating profit was up by +36.1%.

In France revenues were up by +30.9% from $1.25 billion in Q2 2010 to $1.64 billion in Q2 2011. In constant currency revenues were up by +15.5%. Operating profit was up by +148.9% from $9.9 million in Q2 2010 to $24.8 million Euro in Q2 2011. In constant currency operating profit was up by +117.9%.

In Italy revenues were up by +33.3% from $258.8 million in Q2 2010 to $344.9 million in Q2 2011. In constant currency revenues were up by +17.6%. Operating profit was up by +65.7% from $13.5 million in Q2 2010 to $22.4 million Euro in Q2 2011. In constant currency operating profit was up by +45.8%.

In other Southern European countries revenues were up by +14.9% from $168.5 million in Q2 2010 to $193.7 million in Q2 2011. In constant currency revenues were up by +3%, however, Spain declined by -2%. Operating profit was up by +30.1% from $2.1 million in Q2 2010 to $2.7 million Euro in Q2 2011. In constant currency operating profit was up by +20%.

In Northern European countries revenues were up by +23.8% from $1.26 billion in Q2 2010 to $1.56 billion in Q2 2011. In constant currency revenues were up by +9.4% with the UK, Germany, Belgium and Nordic region all growing in excess of +10%. The Netherlands was the only soft spot with constant currency revenue growth of just +3%. Operating profit was up by +97.4% from $28.4 million in Q2 2010 to $56.1 million Euro in Q2 2011. In constant currency operating profit was up by +72.2%.

In Asia/Pacific and the Middle East revenues were up by +31% from $505.7 million in Q2 2010 to $662.8 million in Q2 2011. In constant currency revenues were up by +16.4%. Operating profit was up by +58.9% from $12 million in Q2 2010 to $18.9 million Euro in Q2 2011. In constant currency operating profit was up by +43.3%.

Right Management's revenues were down by -14.3% from $98.8 million in Q2 2010 to $84.6 million in Q2 2011. In constant currency revenues were down by +19.9%. Operating profit was down by -64.4% from $7.8 million in Q2 2010 to $2.8 million Euro in Q2 2011. In constant currency operating profit was down by -64.5%.

ManpowerGroup Chairman and CEO, Jeffrey A. Joerres, commented "we continued to drive solid revenue growth with all geographies participating. Mexico, France and Italy all grew in excess of +15% in constant currency. Our emerging markets grew in excess of that."

"Experis, our professional resourcing brand, performed well, with global revenue increasing +12% in constant currency. These solid revenue gains clearly contributed to very good operational leverage. In the latter part of June certain markets experienced softening. However, we continue to be optimistic that we will achieve good year-over-year growth."

"We are anticipating the third quarter of 2011 diluted earnings per share to be in the range of 90 Cents to $1.00, which includes an estimated favourable currency impact of 10 Cents."

Despite the caution of a softening market, investors were enthused by the better than expected quarterly results and, at the close of NYSE trading yesterday, ManpowerGroup's shares were up by +4.39% to $55.45.

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