ManpowerGroup 2007 Annual Report Download - page 22

19Management’s Discussion & Analysis Manpower 2007 Annual Report
Selling and Administrative Expenses increased 25.9%, or 15.6% in constant currency, primarily due to the need to support the
increased business volumes. Expenses as a percent of revenues decreased in 2007 compared to 2006, primarily due to
productivity improvements, as Other EMEA has been able to increase revenues without a similar increase in branch headcount.
OUP was $256.7 million, an increase of 63.8%, or 50.1% in constant currency. The OUP Margin increased to 3.8% from 3.0%
in 2006 due to the increased Gross Profi t Margin level and the improved leveraging of our expense base with the increasd
revenue and gross profi t levels.
Italy – Revenues in Italy increased 23.4% in 2007 to $1.4 billion, or
13.0% in constant currency. The revenue growth rates declined
slightly during the year but demand for our services remained strong.
Permanent recruitment revenues increased 69.5%, or 55.0% in
constant currency, from the prior year.
The Gross Profi t Margin in 2007 was fl at compared to 2006 as the
increase in the permanent recruitment business offset declines in the
temporary recruitment business.
Selling and Administrative Expenses increased 7.1%, but decreased
1.8% in constant currency. This decrease in constant currency is
primarily due to a decrease in personnel and consulting costs.
Expenses as a percent of revenues decreased in 2007 compared to
2006 as we were able to leverage the existing cost base to support
the increased revenues without a similar increase in expenses.
OUP was $103.7 million, an increase of 63.3%, or 49.1% in constant
currency. The OUP Margin increased to 7.4% from 5.6% in 2006, as a
result of improved leveraging of our expense base with the increased revenue and gross profi t levels.
Jefferson Wells – Jefferson Wells provides highly-skilled project personnel along four primary business lines – internal controls,
tax, technology risk management, and fi nance and accounting. Our services are provided through 56 offi ces, which include
major U.S. metropolitan markets, Toronto, fi ve European cities, South Africa and Hong Kong. The majority of employees
assigned by Jefferson Wells are full-time company employees and therefore employee utilization is a signifi cant factor in
determining Gross Profi t Margins.
Revenues decreased during the year, to $332.0 million from $373.0
million in 2006, due primarily to a decline in Sarbanes-Oxley related
control services and the completion of two large projects that
positively impacted 2006 revenue levels. The revenue declines
improved through the year, ending with a 3.9% decline in the fourth
quarter, as growth in our non-Sarbanes-Oxley business lines was
able to compensate for much of the Sarbanes-Oxley related declines.
We expect strong growth in these other business lines to continue in 2008.
The Gross Profi t Margin has declined from the 2006 level due primarily
to lower utilization of our professional staff.
Selling and Administrative Expenses increased 14.5% in 2007
compared to 2006 mainly due to $4.0 million of reorganization costs
recorded in the fourth quarter of 2007, $3.0 million of expenses
related to the move to the new world headquarters and our continued
investment in new offi ces, both domestically and internationally. The
reorganization costs represent reserves for severance and other
offi ce closure charges.
OUP was a loss of $5.2 million compared to profi t of $31.9 million in 2006. The OUP Margin was (1.6%) compared to 8.6% in
2006. This decrease in OUP is a combination of the lower Gross Profi t Margin level coupled with the increase in Selling and
Administrative Expenses.
Jefferson Wells Revenues
in millions ($)
386.2
373.0
332.0
2007
2006
2005
Jefferson Wells Operating Unit Profi t
in millions ($)
33.3
31.9
(5.2)
2007
2006
2005
Italy Revenues
in millions ($)
899.8
1,132.6
1,398.1
2007
2006
2005
Italy Operating Unit Profi t
in millions ($)
43.6
63.5
103.7
2007
2006
2005