Back to top

Analyst Blog

Improving economic trends in Europe, along with effective cost management helped ManpowerGroup Inc. (MAN - Analyst Report) to come up with better-than-expected third-quarter 2013 results. The company’s adjusted quarterly earnings per share (EPS) came in at $1.26, handily beating the Zacks Consensus Estimate of $1.09 and rising 59.5% year over year.

However, including one-time items, EPS came in at $1.18, up 49.4% from the prior-year quarter. Notably, Manpower stated that its quarterly earnings were not affected by foreign currency fluctuations.

Revenues & Margins

Total revenue inched up 0.3% (but fell 0.3% in constant currency) year over year to $5,188.8 million, based on robust performances across all geographies, excepting for the Asia Pacific and the Middle East. Moreover, reported revenues came ahead of the Zacks Consensus Estimate of $5,114.0 million.

Gross profit dropped 0.3% to $853.6 million, due to marginal rise in cost of services, partly offset by higher revenues. Gross margin fell 10 basis points (bps) to 16.5%, due to sluggish performance of the permanent recruitment business in the quarter.

Manpower posted operating profit of $162.4 million, up 37.1% from the prior-year period. Excluding restructuring charges, operating profit rose 43% year over year, while operating margin rose 100 bps to 3.3%.

Selling and administrative expenses fell 6.3% (6.6% on constant currency) to $691.2 million.

Operating Groups

By geographic segments, revenues from the United States rose 0.1% to $761.8 million year over year. The segment’s adjusted operating profit increased 39.8% to $34.3 million.

In Other Americas, revenues decreased 1.6% (up 3.4% in constant currency) to $382.0 million, while the segment’s operating profit increased 4.9% (7.9% in constant currency) to $11.4 million.

In France, revenues rose 2.1% year over year (down 3.6% in constant currency) to $1,420.7 million, while the segment’s operating profit increased 60.7% (51.5% in constant currency) to $58.4 million.  

In Italy, revenues increased 9.3% year over year (3.3% in constant currency) to $269.7 million. The segment’s segment operating profit increased 14.4% (8.4% in constant currency) to $10.7 million.

In Other Southern Europe, revenues increased 20.4% (12.5% in constant currency) to $227.9 million from the year-ago quarter. The operating profit came in at $4.0 million, up 79.8% (67.2% in constant currency) year over year.

In Northern Europe, revenues rose 1.5% (fell 0.3% in constant currency) to $1,448.1 million, whereas operating profit increased 18.3% (16.8% in constant currency) to $50.3 million, both on a year-over-year basis.

In APME (Asia Pacific Middle East), revenues came in at $601.4 million, down 12.6% (down 1.2% in constant currency) year over year. The segment’s operating profit came in at $19.2 million, down 7.2% (up 4.9% in constant currency) from the prior-year quarter.

Revenues from Right Management decreased 3.6% (1.8% in constant currency) year over year to $77.2 million. The company posted operating income of $4.5 million, down 20.9% (13.0% in constant currency) from the year-ago quarter.

Other Financial Details

Manpower ended the quarter with cash and cash equivalents of $488.7 million, total debt of $516.5 million, reflecting a debt-to-capitalization ratio of 16.0%, and shareholders’ equity of $2,793.4 million. The company has amended its revolving credit facility agreement. It has reduced the borrowing limit to $600 million from $800 million and extended the tenure by two years (maturing on Oct 2018). Moreover, Manpower incurred a capital expenditure of $33.6 million during the nine months period ended Sep 30, 2013.  

Guidance

Manpower now expects fourth-quarter 2013 earnings per share in the range of $1.18–$1.26. The Zacks Consensus Estimate for fourth quarter 2013 stands at $1.18. Management anticipates fourth-quarter total revenue to range from flat to negative 2%. Gross margin is expected to remain in the range of 16.5%–16.7%. Further, operating profit margin is anticipated to be 3.2% to 3.4%. Tax rate is expected to be in the range of 38% to 39%.

With a well-established network in about 80 countries, Manpower currently provides services to about 400,000 clients. We believe that Manpower’s brand value, comprehensive range of services and a strong global network provide it a competitive edge over peers like Robert Half International Inc. (RHI - Analyst Report), TrueBlue, Inc. (TBI - Snapshot Report) and Korn/Ferry International (KFY - Snapshot Report). Currently, Manpower carries a Zacks Rank #1 (Strong Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%