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World - ManpowerGroup's results boosted by weak Dollar

24 October 2011

Revenues were up by +16.3% from $4.97 billion in Q3 2010 to $5.78 billion in Q3 2011 at ManpowerGroup (NYSE:MAN), the world's third-largest staffing firm. At constant currency, revenues were up by +8.8%.

Interim results for the three months ended 30 September 2011, released on Friday 21 October 2011, reveal that gross profit was up by +13.1% from $841.2 million in Q3 2010 to $951.3 million in Q3 2011. At constant currency, gross profit was up by +6.1%. Gross margins declined from 16.9% in Q3 2010 to 16.5% in Q3 2011 of which half was due to lower tax credits for hiring unemployed workers in the US and lower payroll tax subsidies in France.

Operating profit was up by +45.1% from $108.9 million in Q3 2010 to $158 million in Q3 2011. At constant currency, operating profit was up by +34.2%.

Net earnings were up by +55% from $51.3 million in Q3 2010 to $79.6 million in Q3 2011. At constant currency, net earnings was up by +42.6%.

In the United States revenues were up by +4% from $797 million in Q3 2010 to $828.9 million in Q3 2011. Operating profit was up by +24.5% from $25.9 million in Q3 2010 to $32.1 million in Q3 2011.

In other Americas revenues were up by +20.2% (up +17.5% at constant currency) from $317.1 million in Q3 2010 to $381.1 million in Q3 2011. Operating profit was up by +28% (up +24.6% at constant currency) from $8.2 million in Q3 2010 to $10.6 million in Q3 2011.

In France revenues were up by +18.3% (up +8.2% at constant currency) from $1.41 billion in Q3 2010 to $1.67 billion in Q3 2011. Operating profit was up by +11.5% (up +2.4% at constant currency) from $25 million in Q3 2010 to $27.9 million in Q3 2011.

In Italy revenues were up by +24.9% (up +14.4% at constant currency) from $257.1 million in Q3 2010 to $321 million in Q3 2011. Operating profit was up by +68.6% (up +54.6% at constant currency) from $11.4 million in Q3 2010 to $19.1 million in Q3 2011.

In other Southern European countries revenues were up by +13% (up +5.2% at constant currency) from $183 million in Q3 2010 to $206.9 million in Q3 2011. Operating profit was down by -3.7% (down -7.6% at constant currency) from $3.2 million in Q3 2010 to $3 million in Q3 2011.

In Northern European countries revenues were up by +16.9% (up +8.5% at constant currency) from $1.37 million in Q3 2010 to $1.6 million in Q3 2011. In constant currency, revenue grew by 15% in the UK, 11% in the Nordic region, 4% in Belgium but only 3% in Germany and the Netherlands. The company attributed its strong performance in the UK to a major restructuring four years ago which has resulted in a better suite of solutions and a better mix of clients. Operating profit was up by +57.7% (up +47% at constant currency) from $39.8 million in Q3 2010 to $62.8 million in Q3 2011.

In Asia Pacific and Middle East revenues were up by +26.2% (up +14.5% at constant currency) from $555.7 million in Q3 2010 to $701 million in Q3 2011. Operating profit was up by +64.4% (up +50.6% at constant currency) from $13.1 million in Q3 2010 to $21.7 million in Q3 2011.

At Right Management, the company’s talent and career management workforce solutions brand, revenues were down by -9.5% (down -13.6% at constant currency) from $85.5 million in Q3 2010 to $77.5 million in Q3 2011. Operating profit was down from nil in Q3 2010 to a loss of -$1.9 million in Q3 2011.

Jeffrey A. Joerres, ManpowerGroup Chairman and CEO, commented "we experienced solid growth throughout all geographies. In the third quarter, our strategic investments in differentiation, diversification and productivity contributed to our operating profit increase of 45%. Our core business, Manpower, continues to grow despite the tepid economic environment, while our professional and project-based resourcing business, Experis, and our solutions business are rapidly adding to profitability and enhancing ManpowerGroup's positioning with our clients."

"We are anticipating the fourth quarter of 2011 diluted earnings per share to be in the range of 85 Cents to 95 Cents, which includes an estimated favourable currency impact of 3 Cents. This is before expected re-organisation charges of 15 to 20 Cents per diluted share."

According to Reuters, Manpower said sales growth in some major European economies had slowed a little in September and the first few weeks of October, and a soft economic environment will likely extend into early 2012 limiting revenue growth rates in the first quarter to a low single-digit. "The last few weeks, early October, we did see things tail off a little bit within the French market as well in terms of year on year growth," Chief Financial Officer Mike Van Handel told analysts.

Despite slower revenue growth in this quarter and pressure on gross margins, the company’s earnings still exceeded analysts’ expectations and, at close of play in New York on Friday, ManpowerGroup's shares were up by +3.13% to $40.82

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