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Kelly revenue up 2.6% on currency boost

July 22 2008

Second-quarter revenue rose 2.6% at Kelly Services Inc. (NASD: KELYA) to $1.45 billion, but fell 1.3% on a constant currency basis.

Kelly's U.S. revenue slipped 3.2% to $839.1 million.

"Our second-quarter performance reflects the deterioration in economic conditions and the further weakening of the staffing market, particularly in the U.S.," President and CEO Carl Camden said. "These conditions are now beginning to ripple through other parts of the global economy."

Kelly's Americas commercial staffing division revenue dipped 6.1% to $654.2 million. On the other hand, its Americas' professional and technical staffing revenue edged up 0.9% to $238.5 million. Kelly's Americas division includes the U.S., Canada, Puerto Rico and Mexico.

The company's second-quarter European revenue rose 12.4% to $405.5 million, up 1.3% on a constant currency basis.

Kelly's U.K. revenue, its largest foreign market, fell 7.3% to $109.9 million, down 6.6% in constant currency.

Second-quarter Asia Pacific revenue rose 20.0% to $103.5 million, up 9.4% on a constant currency basis.

Overall, second-quarter gross margin improved to 17.7% from 17.5%

Net income fell 31.4% to $10.5 million from $15.3 million in the second quarter of last year. The company said it had a $3.8 million benefit from a change in French payroll tax law, but reported $2.4 million in restructuring costs for its U.K. operations.

Kelly did not provide earnings guidance, citing economic uncertainty.

Kelly Services Inc. (NASD: KELYA)
For the second quarter ended June 29, 2008, compared with the same period in 2007.
Revenue: $1.45 billion, +2.6%
Net income: $10.5 million, -31.4%

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