| Europe
boosts Manpower - Profits grow, U.S. slows
Buoyed by robust economies in its
crucial European markets, global staffing
company Manpower Inc. on Tuesday reported
strong revenue and earnings growth.
The firm's U.S. performance -- regarded
as an indicator of the country's labor
market -- lagged, but a Manpower executive
said the company expects domestic growth
later this year.
For the three months ending Dec. 31,
Glendale-based Manpower said it took in
$4.7 billion, up 15.8% from revenue in
the fourth quarter of 2005.
Profit soared to $164.4 million, up nearly
85%, but much of that stemmed from the
sale last month of a Scandinavian business
unit. Manpower earned $99.6 million from
continuing operations, up 12.6% from the
year-ago quarter.
"The last several quarters in Europe,
we've seen a strengthening of the economies
generally, and certainly that has driven
overall demand for our services,"
Mike Van Handel, chief financial officer,
said.
Europe provides more than 70% of Manpower's
business.
Revenue in France, the company's largest
single market, grew nearly 17%, to $1.6
billion. Revenue in the rest of Europe,
the Middle East and Africa rose 24%, to
$1.8 billion.
The international operations, which altogether
make up 85% of Manpower's revenue, made
for "a really strong quarter,"
said Mark S. Marcon, who follows the company
for Milwaukee's Robert W. Baird &
Co. Inc.
With the core international staffing
business posting year-over-year gains,
in dollar terms, of 20% in revenue and
37% in operating profit, "that's
a tremendous performance," Marcon
said.
The U.S. was another story: Sales dipped
1.2%, to $528 million.
"We have seen a little bit of softness
in revenue growth in the U.S.," Van
Handel said, "but I think the important
point for the quarter is it did stabilize
as we got into December. . . . We're seeing
a bit of a pause in the economy, but I
think the economy is beginning to digest
that slowing."
Van Handel said he expected further contraction
in U.S. revenue in the first quarter of
2007 before growth resumes. He noted that
while temporary-staffing revenue was down,
Manpower's permanent recruitment business
in the U.S. rose 60% for the fourth quarter
compared with the same period in 2005.
But Manpower's fourth-quarter domestic
results may have made investors a bit
nervous about the U.S. economy, and help
explain Tuesday's decline in the company's
stock, Marcon said.
After gaining nearly 2% on Monday, Manpower
shares fell sharply after the earnings
announcement.
The stock closed at $71.56, down $3.82,
or 5.1%. Volume was almost five times
the average of the previous three months.
Beyond perceptions of the U.S. economy's
direction, Marcon said, expectations about
Manpower's earnings "may have been
fanned to unrealistically high levels"
by recent upgrades from some investment
houses.
Some media outlets, including the Journal
Sentinel, reported online Tuesday that
Manpower's earnings of $1.15 from continuing
operations fell short of the average analyst
expectation of $1.18. But excluding one-time
factors and the effect of currency fluctuations,
earnings from continuing operations totaled
$1.20, a Manpower spokeswoman said.
Van Handel said he didn't think confusion
over per-share performance affected Tuesday's
trading. Large institutional investors
likely view the per-share earnings the
same way Manpower does, he said.
Also Tuesday, Manpower subsidiary Jefferson
Wells said it is opening an office in
Frankfurt, Germany. It will be the fifth
international office for the Milwaukee-based
company that helps organizations with
financial and regulatory compliance issues.
Its other international offices are in
Amsterdam, London, Milan and Toronto.
The company said it expects to open several
more international locations later this
year.
|
