ManpowerGroup 2013 Annual Report Download - page 29

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Management’s Discussion & Analysis ManpowerGroup 2013 Annual Report
The Americas, Southern Europe, Northern Europe and APME segments derive a significant majority of their revenues from
the placement of contingent workers. The remaining revenues within these segments are derived from other workforce
solutions and services, including recruitment and assessment, training and development, and ManpowerGroup Solutions.
ManpowerGroup Solutions includes TBO, MSP, RPO, BTS, SWC and Language Services. Right Management’s revenues
are derived from career management and workforce consulting services. Segment revenues represent sales to external
clients. Due to the nature of our business, we generally do not have export sales. We provide services to a wide variety of
clients, none of which individually comprises a significant portion of revenues for us as a whole or for any segment.
Financial Measures — Constant Currency and Organic Constant Currency
Changes in our financial results include the impact of changes in foreign currency exchange rates and acquisitions. We
provide “constant currency” and “organic constant currency” calculations in this report to remove the impact of these
items. We express year-over-year variances that are calculated in constant currency and organic constant currency as
a percentage.
When we use the term “constant currency,” it means that we have translated financial data for a period into United States
dollars using the same foreign currency exchange rates that we used to translate financial data for the previous period. We
believe that this calculation is a useful measure, indicating the actual growth of our operations. We use constant currency
results in our analysis of subsidiary or segment performance. We also use constant currency when analyzing our
performance against that of our competitors. Substantially all of our subsidiaries derive revenues and incur expenses within
a single country and, consequently, do not generally incur currency risks in connection with the conduct of their normal
business operations. Changes in foreign currency exchange rates primarily impact reported earnings and not our actual
cash flow unless earnings are repatriated.
When we use the term “organic constant currency,” it means that we have further removed the impact of acquisitions in the
current period from our constant currency calculation. We believe that this calculation is useful because it allows us to show
the actual growth of our pre-existing business.
Constant currency and organic constant currency percent variances, along with a reconciliation of these amounts to
certain of our reported results, are included on pages 36 and 37.
Results of Operations — Years Ended December 31, 2013, 2012 and 2011
In 2013, we experienced revenue declines in most of our markets as demand for our services continued to be unfavorably
impacted by the economic uncertainty. While we have seen improving trends throughout the year in many of our markets
in the Americas and Europe, our APME segment has seen continued declines due to the soft demand for our staffing/
interim services and fewer billing days in 2013 compared to 2012. Our consolidated revenue growth improved throughout
the year, with a 6% decline in the first quarter improving to 1% growth in the fourth quarter as the global economy started
to stabilize. Our staffing/interim business and our European permanent recruitment business declined during the year, while
our ManpowerGroup Solutions business continued to see solid growth due mostly to growth in our RPO and MSP offerings.
At Right Management, the decrease in demand for our talent management services persisted in 2013 as companies
continued to delay discretionary spend through much of the year, while demand for our counter-cyclical outplacement
services remained flat in 2013 compared to 2012.
Our gross profit margin in 2013 compared to 2012 remained flat as the slight improvement in our staffing/interim gross
profit margin was offset by the decline in our permanent recruitment business. Our staffing/interim gross profit margin
improvement in 2013 was largely due to payroll tax credits related to the Credit d’Impôt pour la Compétitivité et l’Emploi
(“CICE”) in France, with additional improvement from strong price discipline in the United States. These gains were largely
offset by margin declines that we experienced in certain European and APME countries and territories due to continued
pricing pressures. For additional information on the CICE payroll tax credit, see the Employment-Related Items section of
Management’s Discussion and Analysis.
We recorded $89.4 million of restructuring charges in 2013 as we further simplified our organization and recalibrated our
cost base, a continuation of the simplification and cost recalibration plan we began in the fourth quarter of 2012 that
impacted all of our segments as well as our corporate functions. Selling and administrative expenses decreased 5.7% in
constant currency in the year, or 7% excluding the restructuring charges in each year, as we are seeing the benefits of