ManpowerGroup 2013 Annual Report Download - page 30

28 ManpowerGroup 2013 Annual Report Management’s Discussion & Analysis
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations
these simplification and cost recalibration actions. Typically a slowdown in revenues like we saw in 2013 impacts our
operating profit unfavorably, as we generally experience a deleveraging of our selling and administrative expense base as
expenses may not change at the same pace as revenues. However, due to our simplification and recalibration actions, we
were able to decrease our selling and administrative expenses at a faster pace than the decrease in revenues, which
enabled us to better leverage our expenses and favorably impact our operating profit for 2013.
We executed the simplification and cost recalibration plan in the fourth quarter of 2012 on the premise that we were
entering into a continued period of soft economic conditions with a sluggish recovery. The goal of our plan was to simplify
our organization by creating the right agility and speed, and focuses around four different areas: organization, programs,
technology, and delivery. We achieved a reduction in selling and administrative expenses of $152 million in 2013, and
expect to realize an additional reduction of $40 million in selling and administrative expenses in 2014 as a result of this plan.
The plan focused on recalibration of our costs and thus, we do not expect the cost savings specific to this plan to return as
our revenue volumes increase. The primary elements of the simplification and cost recalibration plan were implemented in
2013 and we will continue to evolve and enhance our delivery channels.
CONSOLIDATED RESULTS — 2013 COMPARED TO 2012
The following table presents selected consolidated financial data for 2013 as compared to 2012.
Reported
Variance in
Constant
Variance in
Organic Constant
(in millions, except per share data) 2013 2012 Variance Currency Currency
Revenues from services $ 20,250.5 $ 20,678.0 (2.1)% (2.1)% (2.4)%
Cost of services 16,883.8 17,236.0 (2.0) (2.0)
Gross profit 3,366.7 3,442.0 (2.2) (2.1) (2.4)
Gross profit margin 16.6% 16.6%
Selling and administrative expenses 2,854.8 3,030.3 (5.8) (5.7) (6.0)
Selling and administrative expenses as a % of revenues 14.1% 14.7%
Operating profit 511.9 411.7 24.3 24.3 23.8
Operating profit margin 2.5% 2.0%
Net interest expense 33.4 35.2 (5.0)
Other expenses 3.0 8.1 (63.0)
Earnings before income taxes 475.5 368.4 29.1 28.9
Provision for income taxes 187.5 170.8 9.8
Effective income tax rate 39.4% 46.4%
Net earnings $ 288.0 $ 197.6 45.8 46.4
Net earnings per share — diluted $ 3.62 $ 2.47 46.6 47.0
Weighted average shares — diluted 79.6 80.1 (0.7)
The year-over-year decrease in revenues from services of 2.1% (–2.1% in constant currency and –2.4% in organic constant
currency) was attributed to:
• decreased demand for services in several of our markets within the Americas, Southern Europe and Northern Europe,
where revenues decreased 1.9% (–0.5% in constant currency), 0.2% (–3.6% in constant currency and –3.9% in organic
constant currency) and 0.6% (–1.7% in constant currency and –2.3% in organic constant currency), respectively;
• revenue declines in our larger markets of France and Italy of 5.8% (–6.0% in organic constant currency) and 0.3% in
constant currency, respectively, due to the current economic environments in those countries;
• revenue decline in the United States of 1.4% primarily due to a decrease in our larger strategic account client revenues
because of softening demand, a large client project in our Manpower business line that concluded in the first quarter of
2013 and strong price discipline on new business opportunities;
• revenue decrease in APME of 10.3% (–1.4% in constant currency) primarily due to the decline in demand for our staffing/
interim services, resulting from two fewer billing days and legislative changes in China that restricted the use of temporary
employment, and to a decline in our TBO revenues due to the loss of a Japanese client; and
• decreased demand for talent management services at Right Management, where these revenues decreased 7.1% (–6.6%
in constant currency); partially offset by