ManpowerGroup 2009 Annual Report Download - page 28

26 Manpower 2009 Annual Report Management’s Discussion & Analysis
The Gross Profi t Margin decreased in 2009 compared to 2008 primarily due to a change in the mix of our staffi ng business as
we are seeing our higher-margin small/medium sized businesses decline at a faster rate than our key account business, and
a change in the geographic mix of our staffi ng business as countries with higher gross profi t margins reported larger declines
in business than countries with relatively lower gross profi t margins; and the decline in the permanent recruitment business.
Selling and Administrative Expenses decreased in 2009 compared to 2008 primarily due to the continued cost reduction
efforts in response to the slowing revenue levels. Included in Selling and Administrative Expenses in 2009 were $2.6 million of
reorganization charges, primarily related to severances and offi ce closures, offset by a $4.3 million (¥392.4 million) gain in
Japan related to the termination of a defi ned benefi t pension plan. Expenses as a percent of revenues decreased in 2009
compared to 2008, as we were able to reduce operating expenses to compensate for the decline in revenues in these markets.
OUP Margin for Asia Pacifi c remained fl at at 1.5% for 2009 compared to 1.6% for 2008, as we were able to reduce expenses
at a similar rate compared to our decline in revenues and gross profi t.
Right Management – Right Management is the world’s leading provider of integrated
human capital consulting services and solutions across the employment lifecycle
operating through over 300 offi ces in 50 countries.
Revenues increased 23.7% in 2009 to $559.4 million, or 28.5% in constant currency,
as the demand for our counter-cyclical outplacement services grew considerably
due to the economic slowdown we are currently experiencing. Right Management
did see some slowing during the second half of the year, as demand for our
outplacement services slowed as the economies started to stabilize and mass
layoffs declined. The constant currency revenue increase for Right Management in
the second half of 2009 was 12.8% in constant currency compared to the 45.0%
constant currency increase experienced in the fi rst half of 2009.
Gross Profi t Margin increased in 2009 from 2008 as we effectively managed our variable direct costs given the signifi cant
increase in revenues. Also, the increase is due to a change in our business mix as we saw an increase in our higher-margin
outplacement business.
Selling and Administrative Expenses increased 14.5% in constant currency to support the increased levels of business
activity. However, as a percentage of revenue, expenses decreased in 2009 compared to 2008, as we focused on leveraging
our expense base to service the increased demand without a proportionate increase in expenses.
OUP Margin for Right Management was 20.3% for 2009 compared to 9.9% for 2008 due to the increase in Gross Profi t
Margin and the better leveraging of Selling and Administrative Expenses.
Jefferson Wells – Jefferson Wells delivers professional services in the areas of risk
advisory, tax, and fi nance and accounting. In partnership with its business
alliances, Jefferson Wells delivers services in more than 40 countries and markets
worldwide. In the fourth quarter of 2008, we transitioned a number of employees
into project-based roles to reduce our fi xed direct costs and improve our utilization
of professional staff. Due to the continued decline in revenue levels in the second
quarter of 2009, we made further changes to our business model and have
transitioned the majority of professionals into project-based roles.
Revenues decreased during the year, to $192.3 million from $291.0 million in
2008, primarily due to declines in discretionary spending by our clients because of
the current economic environment.
The Gross Profi t Margin has declined from the 2008 level. We shifted our model in June 2009 to a variable workforce pay
model, and transitioned a number of employees into project-based roles, improving our margins in the second half of 2009.
However, overall margins were still below 2008 levels due to the impact of the lower utilization in the fi rst half of the year.
Management’s Discussion & Analysis
of fi nancial condition and results of operations
Right Management Revenues
IN MILLIONS ($)
559.4
09
452.2
08
412.1
07
Right Management Operating Unit Profi t
IN MILLIONS ($)
113.4
09
44.7
08
34.9
07
Jefferson Wells Revenues
IN MILLIONS ($)
192.3
09
291.0
08
332.0
07
Jefferson Wells Operating Unit Profi t
IN MILLIONS ($)
(22.0)
09
(19.6)
08
(5.2)
07