ManpowerGroup 2007 Annual Report Download - page 21

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Management’s Discussion & Analysis18 Manpower 2007 Annual Report
Management’s Discussion & Analysis
of financial condition and results of operations
France – Revenues in France increased 16.7%, or 7.0% in constant
currency, to $7.0 billion. Local currency revenue growth was 10.4% in
the first quarter of 2007, however growth trends declined in the
second quarter, with stable growth of 5.0% in the second half of the
year. This decline is due to a slowing in the demand for our services as
a result of a softening in the manufacturing and construction industry,
which is a large portion of the temporary recruitment industry in France.
The Gross Profi t Margin increased in 2007 compared to 2006 due
primarily to the impact of the modifi cation to the calculation of payroll
taxes. The impact of this modifi cation was an increase in Gross Profi t
Margin of 226 basis points (2.26%) for 2007. Excluding that impact,
Gross Profi t Margin increased during the year as a result of the 71.8%
increase in our permanent recruitment business.
Selling and Administrative Expenses increased 11.1% from 2006 in
constant currency due primarily to costs related to the modifi cation to
the payroll tax calculation, a $15.0 million (10.3 million) legal reserve
recorded related to the French competition investigation (see Note 14 to the consolidated fi nancial statements for further
information), and continued investments in the permanent recruitment business. Excluding the costs related to the modifi cation
to the payroll tax calculation and the legal reserve, Selling and Administrative Expenses as a percent of revenues in 2007 were in
line with the 2006 level.
OUP was $390.3 million, an increase of 92.0% (77.4% in constant currency) from the prior year. OUP Margin was 5.6%, an
increase from 3.4% in 2006. Included in 2007 OUP is the impact of the modifi cation to the payroll tax calculation and the legal
reserve. The impact of the payroll tax modifi cation was $149.6 million, which represents a 73.6% increase in OUP and a 213
basis point (2.13%) impact on 2007 OUP Margin. The legal reserve represents a 21 basis point (0.21%) decrease in 2007 OUP
Margin. The remaining 26 basis point (0.26%) increase in OUP Margin primarily refl ects the increased Gross Profi t Margin and
the improved productivity in our staffi ng business.
Other EMEA – In previous years, the results of Other EMEA and Italy
were combined as the EMEA segment. Italy is now a separate
reportable segment and all previous years’ results have been revised
to conform to the current year presentation.
The Other EMEA region includes operations throughout Europe, the
Middle East and Africa (excluding France and Italy), which covers a
total of 26 countries delivering services through approximately 1,247
offices. In addition to employment services delivered under the
Manpower and Manpower Professional brands, this region also
includes Elan, which is a leading IT recruitment and managed
services fi rm operating across 17 countries in the region, and Brook
Street, which provides recruitment services in the U.K. The largest
operations in this segment are in the Nordics, the U.K., Elan and
Germany which comprise 20.1%, 16.0%, 15.9% and 10.5% of Other
EMEA revenues, respectively.
Revenues in Other EMEA increased 29.1% in 2007 to $6.8 billion, or
18.5% in constant currency. Local currency revenue growth was experienced in most major markets with the highest growth
rates reported by the Nordics (+27.8%), Germany (+27.7%), Elan (+24.0%), Belgium (+20.1%), and the Netherlands (+17.8%).
Revenue growth rates improved during the year, with 17.0% constant currency growth in the fi rst quarter accelerating to 20.2%
in the fourth quarter. Permanent recruitment revenues increased 46.5% during the year, or 34.5% in constant currency, as a result
of our continued investments in this business.
The Gross Profi t Margin increased from the prior year due to the increase in the permanent recruitment business, improved
pricing in certain markets and the change in the mix of business, as geographies with relatively higher gross margins are growing
faster than those with lower gross margins.
Other EMEA Revenues
in millions ($)
4,571.4
5,230.7
6,750.4
2007
2006
2005
Other EMEA Operating Unit Profi t
in millions ($)
100.5
156.7
256.7
2007
2006
2005
France Revenues
in millions ($)
5,475.8
6,019.1
7,025.3
2007
2006
2005
France Operating Unit Profi t
in millions ($)
168.7
203.3
390.3
2007
2006
2005