Effective cost management facilitated the global leader in the
employment services industry,
), to come up with better-than-expected second-quarter 2013
results. The company's adjusted quarterly earnings came in at
$1.05 per share, substantially surpassing the Zacks Consensus
Estimate of 89 cents and rising 38% year over year.
However, including one time items, earnings came in at 87
cents a share compared with 51 cents in the prior year quarter.
Manpower stated that earnings per share were negatively impacted
by a penny on account of foreign currency fluctuations.
Revenue & Margins
Total revenue dropped 3.2% (2.9% in constant currency) year
over year to $5,040.7 million as lingering macroeconomic woes in
Europe continue to deter the company's financials. However, the
reported revenue came ahead of the Zacks Consensus Estimate of
We observe that although cost of services decreased 3.2% to
$4,204.3 million, gross profit fell 2.9% to $836.4 million due to
a decline in the top line. The company's gross profit margin
remained flat at 16.6% during the quarter.
Manpower posted operating profit of $128.1 million, up 35.6%
from the prior-year period, whereas operating margin expanded 70
basis points to 2.5%. Excluding restructuring charges, operating
profit was $148 million.
Manpower is now contemplating on exiting lower margin business
and venturing into high margin business. The ManpowerGroup
Solutions, the company's high margin business, sustained its
growth momentum during the quarter. Alongside, Manpower is
focusing on abridging costs.
By geographic segments, revenues from services in the
fell 1.9% to $748.5 million from the prior-year quarter. However,
segment's adjusted operating profit increased 40% to $34.4
million, reflecting better pricing and lower costs.
, revenues declined marginally (up 0.4% in constant currency) to
$387.2 million, whereas segment operating profit increased 13.1%
(11.7% in constant currency) to $11.9 million.
, revenues fell 7.5% (9.1% in constant currency) to $1,320.6
million, whereas segment's adjusted operating profit increased
22% in constant currency to $42.9 million, benefiting from CICE
payroll tax credits.
, revenues increased 1.6% (down 0.2% in constant currency) to
$278.4 million, while segment's adjusted operating profit
increased 18% to $15.2 million.
Other Southern Europe
, revenues increased 6.8% (3.7% in constant currency) to $203
million, whereas operating profit came in at $1.2 million, down
59.7% (62.6% in constant currency) from the prior-year
, revenues slipped 1.2% (1.6% in constant currency) to $1,398.8
million, whereas adjusted operating profit increased 8% in
constant currency to $42.5 million.
(Asia-Pacific Middle East), revenues came in at $623.3 million,
down 6% (up 1.9% in constant currency) from the prior-year
quarter. Segment's adjusted operating profit improved 4% in
constant currency to $20.6 million.
decreased 3.5% (2% in constant currency) year over year to $80.9
million. The company posted adjusted operating income of $10
million, up 39% in constant currency from the year-ago
Other Financial Details
Manpower ended the quarter with cash and cash equivalents of
$280.9 million, total debt declined to $534.1 million from $751
million, while shareholders' equity was $2,532.5 million,
reflecting a debt-to-capitalization ratio of 17.4%. The company
has no borrowings under its $800 million revolving credit
facility. It incurred capital expenditures of $25 million during
the first half of 2013.
Manpower now expects third-quarter 2013 earnings in the range
of $1.02 - $1.10 per share. Management anticipates third-quarter
total revenue to decline between 1% and 3% in constant currency
from the prior-year quarter. Gross margin is expected to remain
in the range of 16.5% - 16.7%.
With a well-established network in about 80 countries,
Manpower currently offers its services to about 400,000 clients.
We believe Manpower's brand value, comprehensive range of
services and a strong global network provides it a competitive
advantage over its peers,
Robert Half International Inc
Kelly Services, Inc
) and reinforces its dominant position in the market. Currently,
the stock carries a Zacks Rank #3 (Hold).
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