ManpowerGroup 2004 Annual Report Download - page 47

MANPOWER INC. 2004 Annual Report45
Revenues in EMEA increased 29.7% to $5.1 billion, or 18.0% in constant currency. Constant currency revenue growth
accelerated in the first half of the year and stabilized at 20% for the second half of the year. Fueling this strong revenue
growth were investments in new offices, implementation of effective sales initiatives and positive secular trends in the
usage of flexible staffing services. Revenue growth improved at all entities in the region, with significant local currency
growth coming from Belgium (+27.3%), Elan (+24.6%), Italy (+18.9%) and Germany (+17.4%).
The Gross Profit Margin for the full year was slightly below the prior year, but was stable with the prior year in the second
half of the year. The decline in Gross Profit Margin is due to competitive pricing pressure in certain markets and changing
business mix, partially offset by the favorable impact of growth in permanent placement fees.
Selling and Administrative Expenses increased 22.3%, or 11.4% in constant currency. This growth in expenses reflects
the necessary investments to support the rapid revenue growth. Additionally, we were able to achieve significant
productivity gains, as we were able to leverage our existing office infrastructure.
Operating Unit Profit more than doubled to $115.1 million, an increase of 122.4%, or 104.1% in constant currency. The
Operating Unit Profit Margin increased to 2.3% from 1.3%, reflecting the significant productivity gains.
Jefferson Wells – Jefferson Wells provides highly skilled project
personnel along three primary business lines – internal audit and
controls, technology risk management, tax and finance and
accounting compliance. Our services are provided through 37
offices, which include major United States metropolitan markets,
Toronto and London. The majority of employees assigned by
Jefferson Wells are full-time company employees and therefore
employee utilization is a significant factor in determining Gross
Profit Margins.
Revenues increased dramatically during the year, to $340.6
million from $136.4 million in 2003. This significant growth was
primarily fueled by increased customer demand for technology
risk management and internal audit and control services. Included
in these services are personnel who assist companies in complying
with the Sarbanes-Oxley Act legislation.
Revenue trends grew sequentially throughout the year, and reached their peak levels in October. Revenues in the fourth
quarter were $102.9 million, down 7.0% sequentially from the third quarter of 2004. This decline, which may continue
into 2005, reflects a lower level of demand for our services as companies complete the initial stages of Sarbanes-Oxley
compliance.
Gross Profit Margins have improved by more than 650 basis points (6.5%) over the prior year and are in excess of 40%
for 2004. This improvement primarily reflects the improved utilization of employees assigned to customer engagements.
Selling and Administrative Expenses increased by 56.7% as we continued to invest in new office openings and additional
personnel to support the rapid revenue growth. As a percentage of revenues, these expenses declined dramatically as
we were able to grow into office capacity, in which we had invested in previous years.
Operating Unit Profit was $51.4 million or 15.1% of revenue, reflecting the high employee utilization levels and expense
leveraging discussed earlier.
MANAGEMENT’S DISCUSSION AND ANALYSIS
of financial condition and results of operations
2002
2003
2004
141.7 (+105.5%)
136.4 (-3.7%)
340.6 (+149.6%)
JEFFERSON WELLS REVENUES
in millions ($)
2002
2003
2004
(8.3)
(9.9)
51.4
JEFFERSON WELLS
OPERATING UNIT PROFIT
in millions ($)