By Karen Lentz
Milwaukee-based Manpower Group Inc. Tuesday reported a 2.8 percent rise in fourth quarter profit and virtually flat revenues that were adversely impacted by the strong U.S. dollar.
The global staffing firm, whose results can provide an early indication of what’s to come for the economy, reported net income of $127.4 million, or $1.87 per diluted share, for the quarter ended Dec. 31, compared with $123.9 million, or $1.66 cents per diluted share, in the year-ago period.
The consensus analyst estimate compiled by Zacks Investment Research Inc. was $1.70 per diluted share.
A $7.5 million insurance settlement during the quarter added 7 cents per share to earnings, Chief Financial Officer Jack McGinnis said on the conference call with analysts.
“We had a very solid performance in an uneven and slow growth economic environment,” Chairman and CEO Jonas Prising said on the conference call.
Results were hurt by the strong U.S. dollar, the company said. Using a constant currency method, net income would have risen 6.6 percent over the year-ago period, Manpower reported.
Fourth quarter revenues rose less than 1 percent to $4.96 billion, compared with $4.95 billion a year earlier. Excluding the currency impact, revenue rose 3.2 percent over the year-ago period. Analyst estimates compiled by Bloomberg predicted revenue of $4.98 billion.
In the Americas, prolonged weakness in the manufacturing side of the economy has affected Manpower’s revenue over the last several quarters, with professional services demand also declining, McGinnis said on the call. The Americas segment reported $1.1 billion in revenue for the fourth quarter, down 6.8 percent from the year-ago period.
Revenue declines in the U.S., the company’s second largest market, came primarily from its Experis business line, which staffs expert positions for projects in IT and other areas. The drops were due to reduced demand from several large clients, especially in the financial services sector, McGinnis said on the call.
In France, the company’s largest market, the company sees potential for continued growth.
“France has barely made it out of the starting box as it relates to coming out of the recession both from an economic perspective as well as from a labor market perspective,” Mike Van Handel, senior executive vice president for investor relations, said on the call. Van Handel added that the company expects to see continued slow growth in France.
“The ‘permanent-temporary’ workforce has become a regular feature in many Western European countries, including France, Manpower’s single largest market, as employers seek to minimize their exposure to the greater costs and loss of flexibility associated with permanent hires,” Morningstar analyst David Silver wrote in a research note.
Within the Asia Pacific and Middle East region, the company saw double-digit growth in markets such as India, Korea, Hong Kong, and Taiwan.
The company said it expects revenue growth of 1 percent to 3 percent in the first quarter of 2017, driven by increases in Europe and Asia Pacific Middle East markets. Manpower expects a decrease of 2 percent to 4 percent in the Americas in the coming quarter.
Manpower shares closed Tuesday at $95.46, up 80 cents, or less than 1 percent.
Asked about confidence in the U.S. economy, Prising said optimism isn’t necessarily translating into employer action.
“I am hopeful that some of the optimism translates into more robust economic growth and more opportunities for growth in the U.S., but for now I think we are steady as it goes and we will just live in and operate in that kind of environment,” Prising told investors on the call.
For the year, the company reported earnings of $443.7 million, or $6.27 per diluted share, up 5.8 percent from $419.2 million, or $5.40 per diluted share, the prior year. Revenue for the year was $19.65 billion, up 1.7 percent from $19.33 billion.
