ManpowerGroup 2008 Annual Report Download - page 28

26 Management’s Discussion & Analysis Manpower Annual Report 2008
Management’s Discussion & Analysis
of financial condition and results of operations
2008 OUP was $44.6 million compared to $34.6 million in 2007, an increase of 29.0%, or 30.2% in constant currency. The
OUP Margin increased to 9.9% from 8.4% in 2007 due primarily to the increase in Gross Profit Margin.
Other Operations - The Other Operations segment includes our operations in the
Asia Pacific region, Canada, Mexico and South America, delivering service through
579 offices. Our largest country operation within this segment is Japan, which
accounts for 35.7% of the segment’s revenues.
Revenues in the segment improved 13.4% to $3.0 billion, or 6.9% in constant
currency. Revenue increases were experienced in many of our major markets in this
segment, including Argentina (+38.8%), Japan (+4.2%) and Mexico (+3.1%), offset
by revenue declines in Australia (-4.0%). Revenue was strong in the first half of the
year, with 10.8% growth in constant currency, but began to slow down during the
second half of the year with only 1.2% constant currency revenue growth in the
fourth quarter. In our emerging markets, India continued to show strong revenue
growth throughout the year, while China had very strong growth in the first half of the
year, but contracted in the second half of 2008. Permanent recruitment revenues
increased 20.5%, or 14.8% in constant currency, as a result of the ongoing investment in this business.
The Gross Profit Margin in 2008 remained flat with 2007. The margin was favorably impacted by higher permanent recruitment
business and a shift in the mix of business toward those countries and services with higher gross profit margins. This was
offset by a decrease in Gross Profit Margin in Japan, as they have not been able to pass on increases in social security costs
for their associates in the current market environment.
Selling and Administrative Expenses increased 21.6%, or 15.0% in constant currency, to support the increased revenue
levels, investments in office openings and the permanent recruitment business in certain markets. Included in Selling and
Administrative Expenses is $1.6 million of reorganization costs for severances and other office closure costs recorded in the
fourth quarter. Expenses as a percent of revenues increased in 2008 compared to 2007, particularly in the fourth quarter
where we saw expense deleveraging as a result of the slowdown in revenues.
OUP decreased 25.9%, or 34.4% in constant currency. The OUP Margin decreased to 1.8% in 2008 compared to 2.8% in
2007, due to the increase in Selling and Administrative Expenses.
Financial Measures – Constant Currency And Organic Constant Currency Reconciliation
Certain constant currency and organic constant currency percent variances are discussed throughout this annual report. A
reconciliation to the percent variances calculated based on our annual financial results is provided below. (See Constant
Currency And Organic Constant Currency on pages 18 and 19 for further information.)
07 2,622.4
2,304.9
06
08 2,973.9
Other Operations Revenues
in millions ($)
73.5
69.9
54.5
07
06
08
Other Operations Operating Unit Profit
in millions ($)