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World – Steady improvement in Europe and cost efficiency drives Manpower profit growth

22 October 2013

Yesterday, recruitment giant ManpowerGroup (MAN: NYSE) reported revenue of USD 5.19 billion for the three months ending 30 September 2013, a -0.3% organic fall compared with USD 5.17 billion for the same period last year. The marginal decline this quarter follows five consecutive quarters with a negative revenue trend so the final quarter of 2013 may well prove to be the turning point. 

The company’s operating profit for the period increased organically by +35.8% from USD 118.6 million in Q3 2012 to USD 162.4 million this year. Net income for the period rose organically by +49.8% to USD 94.7 million from USD 63.1 million, year-on-year.

Included in the third quarter results is a restructuring charge, primarily related to office consolidations and severance costs, of USD 8.1 million. The company is undergoing a significant cost reduction exercise and is expecting to exceed its estimate of USD 150 million in SG&A expenses.

Jeffrey A. Joerres, ManpowerGroup Chairman and CEO, commented: “We continue to experience positive momentum in all of the established strategic focus areas. Our strong results for the third quarter were driven by more positive revenue trends and operational leverage achieved through our re-calibration efforts. Our European operations’ revenue experienced slow but steadily improving trends throughout the quarter. Our team across the world remains positive and all of our brands are well positioned as we enter the further quarter.”

The Americas was the only region to report constant currency growth, increasing by +1.2%, year-on-year, to USD 1.14 billion. The United States accounts for 15% of company revenue, with 7% of Group revenue coming from Mexico and Argentina.

Across Southern Europe, ManpowerGroup’s largest business region, revenue fell by -1% in constant currency to USD 1.9 billion. Revenue from Southern Europe accounts for 36% of company revenue, 27% from France. Encouragingly, the French business saw steady improvement through the quarter and into the first weeks of 4Q13.

Northern European revenue fell by -0.3% in constant currency to USD 1.45 billion, while Asia-Pacific Middle East (APME) (predominately Australia and Japan) fell by -1.2% in constant currency to USD 604.4 million. The two regions account for 28% and 12% of total group revenue, respectively. Japanese revenues declined by -2% in constant currency while Australia was off -5%

On a constant currency basis, on the whole, performances across Europe improved. Revenue fell by -4% in France, -6% in the Nordic region, and -1% in the UK. But revenues rose by +3% in Germany, +2% in the Netherlands, and +3% in Italy, the first growth in the market for seven quarters. ManpowerGroup recently announced its intention to increase its market share in the Netherlands.   

The company’s Right Management group revenue reported a year-on-year decline of -1.8%, falling to USD 77.2 million. Right Management is a counter-cyclical outplacement business and contributes 1% of total ManpowerGroup revenue.

According to recent research by Staffing Industry Analysts, ManpowerGroup retains its position as one of the top three staffing firms in the world

In trading yesterday, the company’s share price finished the day at USD 78.25, a -1.35% decline from the previous day, however an increase of +103.4% compared with a year ago. Based on its share price, the company has a current market value of USD 6.1 billion. 

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