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World – ManpowerGroup “on guard” as revenue slips

31 January 2013

The world’s third-largest recruiter ManpowerGroup (MAN:NYSE) said it was on guard for “potential disruption” in all markets, particularly in Europe where it derives two-thirds of it sales. This comes after fourth-quarter revenue slipped -4% (in constant currency) to $5.2 billion, the firm reported on Wednesday.

Looking ahead, ManpowerGroup said it remained optimistic. “At this time we do not anticipate any dramatic negatives. Our first quarter is traditionally a seasonally challenging period and given the tepid demand environment.” The firm expects revenue to fall by up to 8% in the first quarter.

Despite the decline, analysts said the results were better than expected. Gross profit in the three months to December fell -5% (in constant currency) to $876.7 million while operating profit was down -18% to $104.9 million. Net earnings in the quarter were $53.3 million compared to $63.6 million a year earlier, a reduction of -15% (in constant currency).

ManpowerGroup generates most of its sales and profits in Europe where a weakening economy has impacted trading.

In France, the firm’s most important single market, revenues plummeted -9% (in constant currency) to $268.5 million. In a call to analysts, executive vice president Michael J. Van Handel said “we experienced further softening in demand for our services in the French market.” Total revenue in Southern Europe fell -10% to $1.3 billion, weaker than expected as demand in Italy and Spain slowed.

In Northern Europe, the staffing market witnessed further deteriorations as revenues fell -3% (in constant currency) to $1.5 billion although UK revenues rose +4%, the firm said in an analyst call. Revenue in Germany was down -6% and Belgium saw sales drop -7%, both in constant currency.

But in Asia Pacific and the Middle East, business looked brighter despite modest growth of +1% in Japan. Total revenue in the region rose +1% to $697.7 million. Australia revenue fell -7% in constant currency while emerging markets such as China and India reported increased revenue figures. Revenues in the Americas remained flat at $1.2 billion with the US seeing sales drop by -2%.

The company reached a new 52-week high during Wednesday’s trading with the share price closing  at $51.78, +7% jump. 

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