ManpowerGroup 2012 Annual Report Download - page 34

In 2011, revenues from services in the Americas increased 14.8% (14.5% in
constant currency and approximately 10.0% in organic constant currency)
compared to 2010. In the United States, revenues from services improved 12.7%
(approximately 6.0% in organic growth) in 2011 compared to 2010. The organic
growth for the Americas and the United States was primarily due to an increase
in volume in our core temporary staffing business as a result of the economic
improvement. In Other Americas, revenues from services improved 19.5%, or
18.4% in constant currency, in 2011 compared to 2010, led by revenue growth in
Mexico and Argentina. While Mexico saw a consistent increase in demand
throughout the year, Argentina’s revenue increase was primarily due to inflation.
Gross profit margin increased slightly in 2012 compared to 2011 as the increase
in our permanent recruitment business was partially offset by the negative impact
from our interim business due to pricing pressures, an increase in unbillable time
and a decrease due to the reduced FICA taxes from the one-time Hire Act credits
in the United States in 2011 that did not occur in 2012. In 2011, gross profit
margin increased due to the impact on the first quarter from the annualization of the COMSYS acquisition, an improvement
in our United States’ staffing/interim margins due to the relatively higher growth in our Experis business and reduced FICA
taxes as a result of the Hire Act, and the increase in our permanent recruitment business. The SUTA tax increases in the
United States, which were effective in 2011, did not negatively impact margins, as we were able to increase our bill rates to
cover the increases.
In 2012, selling and administrative expenses increased 5.7% in constant currency due mostly to $9.8 million of reorganization
costs and $10.0 million of legal costs incurred in 2012 as well as an increase in bad debt expense in Other Americas as a
result of some uncollectible accounts receivable. The increase was also due to additional headcount in Mexico, Canada
and Brazil to meet the increased demand in those countries and high inflation in Argentina. Partially offsetting these
increases was a decrease in the United States, excluding the reorganization and legal costs, due primarily to a decrease in
variable incentive-based compensation and lower office lease costs. In 2011, selling and administrative expenses increased
11.0% in constant currency due primarily to an increase in our organic salary-related costs, as we added headcount to
support the increased demand, as well as increased variable incentive-based costs as a result of the improved profitability.
OUP margin in the Americas was 2.4%, 3.1% and 2.0% for 2012, 2011 and 2010, respectively. The changes in 2012 and
2011 were primarily due to the United States, where OUP margin was 2.0%, 3.0% and 1.5% in 2012, 2011 and 2010,
respectively. The margin decrease in 2012 in the United States was due to the reorganization and legal costs noted above,
as well as expense deleveraging as we did not decrease expenses as quickly as revenues declined. Other Americas OUP
margin was 3.2%, 3.2% and 2.9% in 2012, 2011 and 2010, respectively. The margin increase in the Americas in 2011
resulted from the higher revenue and gross margin levels coupled with the improved leveraging of expenses.
Southern Europe — In 2012, revenues from services in Southern Europe, which includes operations in France and Italy,
decreased 11.7% (–4.2% in constant currency and –5.3% on an organic constant currency basis) compared to 2011. In
2012, revenues from services decreased 6.1% in organic constant currency in France (which represents 74.8% of Southern
Europe’s revenues) and decreased 8.9% in constant currency in Italy (which represents 14.6% of Southern Europe’s
revenues) and 1.1% (6.9% increase in constant currency) in Other Southern Europe compared to 2011. These decreases in
France and Italy were due primarily to a softening demand in the staffing/interim
business as well as a 21.2% decline in constant currency in our permanent
recruitment business, mostly driven by the further winding down of the Pole
Emploi contract in France.
In 2011, revenues from services in Southern Europe increased 18.1% (12.3% in
constant currency and 11.9% in organic constant currency) compared to 2010.
In 2011, revenues from services increased 12.1% in organic constant currency in
France, 14.2% in constant currency in Italy and 6.8% in constant currency in
Other Southern Europe compared to 2011. These increases resulted from strong
growth in the staffing/interim business, and a 17.4% constant currency increase
in permanent recruitment revenues.
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations
Americas Operating
Unit Profit
In Millions ($)
Americas Revenues
In Millions ($)
’10
’11
’12 4,595.9
4,649.4
4,048.9
’10
’11
’12 111.4
141.9
79.3
ManpowerGroup 2012 Annual Report Management’s Discussion & Analysis
32
Southern Europe Revenues
In Millions ($)
Southern Europe
Operating Unit Profit
In Millions ($)
’10
’11
’12 112.2
170.1
101.8
’10
’11
’12 7,250.9
8,211.8
6,951.7