ManpowerGroup 2012 Annual Report Download - page 36

OUP margin for Northern Europe was 2.8%, 3.5% and 2.8% in 2012, 2011 and 2010, respectively. The OUP margin decline
in 2012 was primarily due to the decline in revenue and gross profit margin. The margin increase in 2011 was the result of
gaining operating leverage to support higher revenue levels without a similar increase in expenses.
APME — In 2012, revenues from services for APME increased 2.5% (3.1% in
constant currency and 1.6% on an organic constant currency basis) compared
to 2011. China and India both made acquisitions in 2011, which significantly
increased their revenues. Excluding acquisitions, revenue growth in constant
currency for 2012 in China and India was 11.4% and 17.5%, respectively. In
Japan (which represents 42.9% of APME’s revenues), we saw a slight decrease
of 0.2% on a constant currency basis for 2012 due to declining demand for our
staffing services within our Manpower business line, offset by a 16.6% increase
in the combined Experis and ManpowerGroup Solutions business lines,
compared to 2011. In Australia, revenues were down 6.0% in constant currency
for 2012 compared to 2011 due to the decreased demand resulting from their
economic slowdown.
In 2011, revenues from services increased 24.0% (14.2% in constant currency
and 7.6% on an organic constant currency basis) compared to 2010. In 2011,
China and India both made acquisitions, which significantly increased their
revenues. Excluding acquisitions, revenue growth in constant currency was 81.7% and 18.1% for China and India,
respectively. Australia also experienced strong revenue growth in their staffing/interim business, which resulted in growth of
13.2% in constant currency in 2011 compared to 2010. This was offset, in part, by Japan where revenues from services
were flat in constant currency in 2011 compared to 2010 as a 33.9% increase in the ManpowerGroup Solutions business
offset the decline in their staffing/interim business.
Gross profit margin decreased in 2012 compared to 2011 due to the margin declines in our higher-margin ManpowerGroup
Solutions business as well as a slight margin decline in our lower-margin staffing/interim business. In 2011, gross profit
margin decreased due to the changes in business mix that were impacted, in part, by growth in several larger clients with
lower margin business and by the lower-margin business in one of our China acquisitions.
Selling and administrative expenses decreased 3.6% (–3.5% in constant currency) in 2012 compared to 2011 due to
productivity improvements along with tighter expense controls. In 2011, selling and administrative expenses increased
compared to 2010 due to the addition of recurring selling and administrative costs of the China and India acquisitions and
increased compensation costs arising from headcount increases to support the growth in organic revenues and an increase
in variable incentive-based compensation as a result of improved results.
OUP margin for APME was 3.3%, 3.0%, and 2.2% in 2012, 2011 and 2010, respectively. The OUP margin increase in 2012
was due to productivity improvements and tighter expense controls as we were able to decrease our selling and
administrative expenses while revenues increased. The improvement in 2011 was due to the increase in revenues and
gross profit margin without the corresponding increase in costs.
Right Management — Right Management is a leading global provider of talent
and career management workforce solutions operating in over 130 offices in
more than 50 countries and territories.
In 2012, revenues from services increased 1.5% (3.4% in constant currency). The
increase was due to the growth in our countercyclical outplacement services,
which were up 10.1% (12.2% in constant currency) in 2012 compared to 2011,
partially offset by a 12.8% (11.2% in constant currency) decline in demand for our
talent management business, as we are seeing a longer sales cycle as clients
defer their discretionary spending.
In 2011, revenues from services decreased 13.6% (–16.6% in constant
currency). This decrease was due primarily to the decline in the demand for the
countercyclical outplacement services, where revenues generally decline as we
experience an economic recovery. The 25.9% decline in outplacement services
was partially offset by an increase of 6.1% in constant currency in our talent
management business.
Gross profit margin increased in 2012 compared to 2011 due to the margin improvement in each business line and the
business mix changes in our revenues, as we saw an increase in the higher-margin outplacement services and a decrease
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations
APME Revenues
In Millions ($)
APME Operating
Unit Profit
In Millions ($)
’10
’11
’12 2,728.8
2,661.7
2,147.2
’10
’11
’12 90.7
78.8
47.2
Right Management
Operating Unit Profit
In Millions ($)
’10
’11
’12 13.4
(1.4)
3.5
’10
’11
’12 328.5
323.7
374.6
Right Management Revenues
In Millions ($)
ManpowerGroup 2012 Annual Report Management’s Discussion & Analysis
34