Europe unemployment takes toll on Manpower

One of the world's largest staffing companies calls the global economic environment challenging.

By Bruce Kennedy Oct 19, 2012 11:07AM

Dynamic Graphics age fotostock age fotostockGlobal economic uncertainty created a mixed third-quarter earnings report for Manpower (MAN), as high unemployment rates in Europe took their toll.

 

The international staffing company said its net income fell 20.7% to $63.1 million, compared with the same time a year earlier. Revenue, meanwhile, totaled $5.2 billion, down 11% from the prior year, or down 4% in constant currency.


The company, however, beat Wall Street estimates. The earnings per share of 79 cents trounced analysts' expectations for 68 cents per share, according to Thomson Reuters. Shares soared 9% Friday.

 

Jeffrey Joerres, Manpower's chairman and CEO, acknowledged that the current economic environment remains challenging. But in a press statement he noted the company remains "extremely vigilant" regarding overall cost and efficiency issues.


"Both contributed nicely to the third quarter performance," he said. "We will continue to pursue efficient models to deliver our service while creating more agility throughout the entire organization."


A reluctance by many businesses to bring on new staffing affected sales in many of the company's markets.

 

In the Americas, which make up 22% of its revenue, Manpower reported an 8% decline iin its U.S. operations, although it saw a 9% growth in Mexico.

 

The company's Asia-Pacific market, which accounts for 13% of its revenue, also reported declines. Revenue from fell 2%, while revenue from Australia and New Zealand was down 10% -- or 9% in constant currency variances.

 

But Manpower was hit hardest in Europe. The company does about two-thirds of its business there, where the ongoing debt crisis that is threatening the future of the euro has caused regional unemployment to soar.

 

Revenue in France, one of the company's biggest markets, was down 17%, while revenue from Italy and Spain both declined more than 20%.

 

Double-digit declines were also reported for Manpower's business in Germany, the Netherlands and Belgium, although U.K. revenue was aided by the recent Olympic Games and rose 3%.

 

Company executives say despite the softening European market the core of Manpower's business remains strong. They remain enthusiastic but pragmatic about the future.

 

"We are anticipating the fourth quarter of 2012 diluted earnings per share to be in the range of 72 cents to 80 cents, which includes an estimated unfavorable currency impact of 1 cent," Joerres said."This is before considering anticipated reorganization charges."

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