Manpower, Kelly Earnings Drop

Feb 5, 2008

Weak U.S. temporary employment growth and economic uncertainty, along with restructuring charges, impacted fourth-quarter earnings at two of the world’s largest staffing companies. Both Manpower and Kelly Services reported lower net income for the quarter ended Dec. 31. Both companies reported operating profit gains in the double digits, and per-share earnings were above analysts’ expectations.

Manpower posted fourth-quarter net income of $133.1 million, or $1.63 a share, down 19.1 percent from $164.4 million, or $1.90 a share in the fourth quarter of 2006. The year-ago period’s results included income from discontinued operations and the latest quarter included a $4 million charge for reorganization at Jefferson Wells, the company’s accounting and finance unit. Operating profit was up 31.5 percent. The results also reflected the impact of stronger foreign currency.  

Analysts surveyed by Thomson Financial were expecting fourth-quarter earnings of $1.53 a share, according to the Associated Press. Revenue rose 19.6 percent to $5.63 billion from $4.71 billion in the fourth quarter of 2006.

CEO Jeffrey Joerres said “in a statement. “Europe, Asia, and our emerging markets performed exceptionally well.” 

Kelly posted quarterly net income of $18.6 million (52 cents a share), down 23.8 percent from $24.4 million, or 68 cents a share, in the year-ago period. Operating profit rose 19 percent. The most recent quarter results included $1.4 million for restructuring in the Americas commercial staffing operations. During the year, the company sold its home care unit and closed or consolidated about 60 underperforming branches. It also closed branches in the United Kingdom

Fourth-quarter profit beat analysts’ estimates of 48 cents a share (before items), according to Reuters Estimates. Revenue rose 3.8 percent to $1.48 billion, compared with $1.42 billion in the 2006 period, helped by strong international sales. Sales in the Americas commercial segment, 47 percent of total revenue, fell 6 percent. 

“There is no question that the slowing U.S. economy dramatically influenced our 2007 performance,” said CEO Carl Camden in a conference call with analysts. “However, results would have been impacted to an even greater extent had we not made significant progress in repositioning Kelly for long-term growth.”

Full-year 2007 net income for Manpower rose 21.8 percent to $484.7 million from $398.0 million in 2006. Revenue rose 16.7 percent to $20.50 billion from $17.56 billion in 2006.  

Kelly reported full-year revenue of $5.7 billion, a 2.2 percent increase from $5.5 billion the year before. For the year, adjusted earnings increased to $61.5 million, or $1.68 a share, compared with $56.8 million or $1.56 a share for 2006.

 –Joyce Routson

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