ManpowerGroup 2008 Annual Report Download - page 27

25Manpower Annual Report 2008 Management’s Discussion & Analysis
Italy – Revenues in Italy increased 8.7% in 2008 to $1.5 billion, or 0.5% in constant
currency. The revenue growth rates were strong in the first quarter with 15.0%
growth in constant currency, but declined during the year to a contraction of
18.3% in constant currency in the fourth quarter as demand for our services
continued to decline. Permanent recruitment revenues increased 28.5%, or
18.8% in constant currency, from the prior year.
The Gross Profit Margin improved in 2008 compared to 2007 due to the growth in
the permanent recruitment business.
Selling and Administrative Expenses increased 11.1%, or 3.1% in constant
currency primarily due to an increase in personnel costs. While expenses as a
percent of revenues improved for the first nine months of the year, we saw expense
deleveraging in the fourth quarter and for the year due to the revenue declines in
the fourth quarter.
OUP was $120.3 million, an increase of 16.0%, or 7.3% in constant currency. The OUP Margin increased to 7.9% from 7.4%
in 2007, as the increase in Gross Profit Margin more than offset the impact of expense deleveraging.
Jefferson Wells – Jefferson Wells delivers professional services in the areas of
internal audit, technology risk management, tax, and finance and accounting. Our
services are provided through 36 offices, which include major U.S. metropolitan
markets, Toronto, three European cities, South Africa and Hong Kong. A portion of
employees assigned by Jefferson Wells are full-time company employees and
therefore employee utilization is a significant factor in maintaining Gross Profit
Margins.
Revenues decreased during the year, to $291.0 million from $332.0 million in
2007, due primarily to clients spending less given the current economic conditions.
We saw weakening demand throughout the year, with a decline of 4.7% in the first
quarter and a decline of 21.8% in the fourth quarter.
The Gross Profit Margin has declined from the 2007 level due primarily to the lower
utilization of our professional staff given the decrease in revenues. We continually evaluate the portion of employees who are
full-time to ensure it is appropriate given business volumes. In the current economic environment, we have transitioned a
number of employees into project-based roles in the fourth quarter to reduce our fixed costs.
Selling and Administrative Expenses decreased 8.8% in 2008 compared to 2007 due to lower office costs, as we are reducing
costs in response to the softening demand. As we adjusted our network in light of the current environment, we recorded $7.8
million of reorganization costs in the fourth quarter of 2008 for severance and other office closure charges. We recorded $4.0
million of reorganization costs in the fourth quarter of 2007 related to severance and other office closure costs.
2008 OUP was a loss of $19.6 million compared to a loss of $5.2 million in 2007, as expense reductions could not fully
compensate for the declines in Revenues and Gross Profit.
Right Management – Right Management is the world’s leading provider of integrated
human capital consulting services and solutions across the employment lifecycle
operating through 283 offices in 51 countries.
Revenues increased 9.7% in 2008 to $449.7 million, or 9.3% in constant currency,
as the demand for our counter-cyclical outplacement services has grown
considerably in the current economic environment.
The Gross Profit Margin improved in 2008 primarily due to improved utilization of
staff as a result of the increase in business, as well as improved management of
variable direct costs.
Selling and Administrative Costs increased 11.5%, or 11.2% in constant currency,
from 2007 to support the increased revenue levels. As a percent of revenue,
expenses increased slightly for the year.
07 1,398.1
06 1,132.6
08 1,519.5
Italy Revenues
in millions ($)
07 103.7
06 63.5
08 120.3
Italy Operating Unit Profit
in millions ($)
07 332.0
06 373.0
08 291.0
Jefferson Wells Revenues
in millions ($)
Jefferson Wells Operating Unit Profit
in millions ($)
07
06 31.9
08 (19.6)
(5.2)
07 409.9
06 387.3
08 449.7
Right Management Revenues
in millions ($)
07 34.6
18.3
06
08 44.6
Right Management Operating Unit Profit
in millions ($)