Effective cost management and tax credits earned in France
facilitated the global leader in the employment services
), to come up with better-than-expected first-quarter 2013
The company's adjusted quarterly earnings came in at 63 cents
a share, substantially surpassing the Zacks Consensus Estimate of
45 cents and jumping 26% year over year. However, including one
time items, earnings came in at 31 cents a share. The company
stated that earnings per share were negatively impacted by a
penny on account of foreign currency fluctuations.
Revenue & Margins
Total revenue dropped 6.4% (5.8% in constant currency) year
over year to $4,768.9 million and missed the Zacks Consensus
Estimate of $4,774 million.
Lingering macroeconomic woes continue to deter the financials
of the company. Sequentially, the demand for the counter-cyclical
outplacement services moderated significantly during the quarter.
Revenues at the company's outplacement business were up 1% year
over year, marking a major decline from 16% growth witnessed
during the fourth quarter of 2012.
We observe that although cost of services decreased 6.4% to
$3,978.8 million, gross profit fell 6.8% to $790.1 million due to
a decline in the top line. However, the company's gross profit
margin remained flat at 16.6% during the quarter.
Manpower posted operating profit of $54.4 million, down 42%
from the prior-year period, whereas operating margin contracted
70 basis points to 1.1%.
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 4% to $706.1 million from the prior-year quarter. However,
segment operating profit increased 7.9% to $7.4 million,
reflecting better pricing and lower employment tax cost.
, revenues declined 3.9% (1.4% in constant currency) to $386.9
million, whereas segment operating profit plunged 43.1% (43.6% in
constant currency) to $8.7 million.
, revenues fell 11.3% (11.8% in constant currency) to $1,145.2
million, whereas segment operating profit nearly tripled to $14.3
million, benefiting from tax credits.
, revenues fell 3.6% (4.1% in constant currency) to $257.9
million, whereas segment operating profit tumbled 19.5% (19.9% in
constant currency) to $11.7 million, reflecting competitive
Other Southern Europe
, revenues edged down 0.9% (1.9% in constant currency) to $193.4
million, whereas operating profit came in at $2.3 million, down
33.8% (35.4% in constant currency) from the prior-year
, revenues slipped 5.1% (5.6% in constant currency) to $1,370.3
million, whereas operating profit plunged 75.8% (75.6% in
constant currency) to $10.6 million, reflecting pricing pressure
and decline in permanent recruitment.
(Asia-Pacific Middle East), revenues came in at $632.5 million,
down 7% (1.4% in constant currency) from the prior-year quarter.
Segment operating profit decreased 25.2% (19.4% in constant
currency) to $14.8 million.
decreased 3.8% (2.5% in constant currency) year over year to
$76.6 million. The company posted operating income of $2 million,
down 18.4% (7.5% in constant currency) from the year-ago
Other Financial Details
Manpower ended the quarter with cash and cash equivalents of
$583.4 million, total debt of $751 million and shareholders'
equity of $2,501.1 million, reflecting a debt-to-capitalization
ratio of 23.1%. The company has no borrowings under its $800
million revolving credit facility. It incurred capital
expenditures of $13 million during the quarter.
Manpower now expects second-quarter 2013 earnings in the range
of 84 cents - 92 cents per share. Management anticipates
second-quarter total revenue to decline between 3% and 5% in
constant currency and at an equivalent rate in U.S. dollars from
the prior-year quarter.
Revenues in the Americas are expected to remain flat, while it
is expected to decline in the range of 8% and 10% in Southern
Europe. Northern Europe revenues are projected to decrease in the
range of 1% - 3%. The company expects APME and Right Management
segments to register a decline in the low-single-digit in
Going forward, Manpower expects to generate higher gross
margin from the Americas and Southern Europe, which in turn is
expected to boost the overall gross margins of the company.
Operating margin is expected to improve during the second quarter
and is projected to be in the range of 2.5% - 2.7%.
With a well-established network of approximately 3,500 offices
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
provide 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).
KELLY SVCS A (KELYA): Free Stock Analysis
KORN/FERRY INTL (KFY): Free Stock Analysis
MANPOWER INC WI (MAN): Free Stock Analysis
ROBT HALF INTL (RHI): Free Stock Analysis
To read this article on Zacks.com click here.