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World – ManpowerGroup reports solid Q4 with good cost control

31 January 2014

Global staffing firm ManpowerGroup (MAN: NYSE) yesterday reported revenue for Q4 2013 of USD 5.3 billion, an organic increase of +0.7%, compared with USD 5.2 billion a year ago. The company’s gross profit rose by +0.9% in constant currency to USD 886.6 million, up from USD 876.7 million last year.

ManpowerGroup achieved net earnings of USD 101.2 million for the three months ending 31 December 2013, an organic increase of +88.5% from net earnings of USD 53.3 million in Q4 2012. The company posted a restructuring charge of USD 26.5 million in the fourth quarter. SG&A as a % of revenue improved by 110 basis points to 13.2% and the company is anticipating an additional $40 million of savings in 2014.

Jeff Joerres, ManpowerGroup Chairman and CEO, said: "The fourth quarter was a good quarter with solid performances from many of our major geographies and business units. Our team continues to execute very well which is contributing nicely to our cost recalibration efforts. We were able to achieve the upper end of our revenue targets as we are experiencing a slightly more positive environment, particularly in Europe. This said, while we are gaining increased confidence we remain guarded on revenue growth in the first quarter.”

Revenue from services across ManpowerGroup’s home market of the United States remained relatively unchanged, year-on-year, at USD 750.6 million down from USD 750.7 million in Q4 2012. The company’s ‘Other Americas’ business region reported revenue growth of +2.5%, in constant currency, to USD 387.1 million. Accounting for 13% of total regional revenue, Mexico reported a +1% organic increase in revenue, while Argentina accounting for 5% of regional revenue, reported organic growth of +13%. Across the whole of the Americas, revenue rose organically by +0.9% to USD 1.1 billion.

Across Southern Europe, ManpowerGroup’s largest business region, revenue rose organically by +2.9% to USD 1.9 billion. France, accounting for 73% of total regional revenue, remains ManpowerGroup’s largest single market, and reported revenue of USD 1.4 billion for the fourth quarter, equating to a year-on-year rise of +1.4% on an organic basis. Revenue from Italy remained unchanged, in terms of constant currency, at USD 281.6 million.

Revenue derived from Northern Europe rose by +0.8% to USD 1.5 billion, in constant currency. On a constant currency basis, revenue grew in Germany (+3%), UK (+2%) and Belgium (+1%) while the Nordics and Netherlands declined by -2% and -1% respectively.

The company’s Asia-Pacific Middle East (APME) business segment (predominately Australia and Japan) was the only region to report a year-on-year decline in revenue. The segment achieved revenue of USD 590.5 million, a fall of -4.9% on an organic basis. Japanese revenues declined by -6% in constant currency, while Australia reported a fall of -4%.  

The company’s Right Management group revenue reported a year-on-year decline of -2.3%, on an organic basis to USD 82.1 million. Right Management is a counter-cyclical outplacement business and contributes 1% of total ManpowerGroup revenue.

Looking forward to Q1 2014, ManpowerGroup remains cautious. The company forecasts that revenue will rise by +2%, on an organic basis, with growth of between +1% and +3% across the Americas, Southern Europe, and Northern Europe. Further declines are expected in APME (between -4% and -6%) and Right Management (between -1% and -3%).

According to research by Staffing Industry Analysts, ManpowerGroup is the third largest staffing firm in the world.  

The results exceeded analysts’ expectations largely due to better than anticipated cost efficiencies and gross margins. However, the cautious forward-looking statement did little to excite investors and, in trading yesterday, the company’s share price finished the day at USD 78, a -1.7% decline from the previous day but an increase of +53.6% compared with a year ago. Based on its current share price, the company has a market value of USD 6.1 billion.

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