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32 ManpowerGroup 2013 Annual Report Management’s Discussion & Analysis
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations
Americas — The Americas segment is comprised of 722 Company-owned
branch offices and 180 stand-alone franchise offices. In the Americas, revenues
from services decreased 1.9% (–0.5% in constant currency) in 2013 compared
to 2012. In the United States, revenues from services declined 1.4% in 2013
compared to 2012. The revenue decline in the United States was attributable to a
decline in staffing/interim services in the Manpower and Experis business lines
due to softening demand from our larger strategic accounts in 2013 compared to
2012, a large client project in our Manpower business line that concluded in the
first quarter of 2013 and strong price discipline in selectively accepting new
business opportunities. These declines were partially offset by an increase in
ManpowerGroup Solutions revenues of 14.2% and an increase in our permanent
recruitment revenues of 4.4% in the United States in 2013 compared to 2012.
In Other Americas, revenues from services declined 2.7% (1.2% increase in
constant currency and 1.1% increase in organic constant currency) in 2013
compared to 2012, with a revenue decline in Argentina of 12.7%, partially offset
by revenue increases in Canada of 1.8% (4.0% in organic constant currency) and
Mexico of 2.5%.
In 2012, revenues from services decreased 1.2% (0.5% increase in constant currency and 0.4% increase in organic
constant currency) compared to 2011. In the United States, revenues from services declined 4.0% in 2012 compared to
2011. The revenue decline in the United States was attributable to staffing/interim services within the Manpower and
Experis business lines as demand from our larger strategic accounts softened in 2012 compared to 2011, and we
maintained stronger pricing discipline on new business opportunities. These declines were partially offset by an increase in
United States permanent recruitment revenues of 17.3% in 2012 compared to 2011. In Other Americas, revenues from
services improved 4.8% (9.9% in constant currency and 9.6% in organic constant currency) in 2012 compared to 2011, led
by revenue growth in Canada, Mexico and Argentina of 19.2%, 10.0% and 8.2%, respectively, in constant currency (16.2%
growth in Canada in organic constant currency).
Gross profit margin increased in 2013 compared to 2012 due to the favorable impact of improved staffing/interim gross
profit margin resulting from stronger pricing discipline in the United States, as well as continued growth in our
ManpowerGroup Solutions and permanent recruitment businesses. In 2012, gross profit margin increased slightly 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 2013, selling and administrative expenses decreased 5.6% (–4.5% in constant currency) due to $10.0 million of legal
costs incurred in 2012 and declines in salary-related and lease costs as a result of the cost recalibration plan, partially offset
by an increase in restructuring costs to $18.0 million recorded in 2013 compared to $9.8 million in 2012. In 2012, selling and
administrative expenses increased 5.7% in constant currency due mostly to $9.8 million of restructuring costs and $10.0
million of legal costs incurred in 2012 as well as an increase in bad debt expense in Other Americas as a result of some
uncollectible accounts receivable. The increase was also due to additional headcount in Mexico, Canada and Brazil to meet
the increased demand in those countries and high inflation in Argentina. Partially offsetting these increases was a decrease
in the United States, excluding the restructuring and legal costs, due primarily to a decrease in variable incentive-based
compensation and lower office lease costs.
OUP margin in the Americas was 3.2%, 2.4% and 3.1% for 2013, 2012 and 2011, respectively. In the United States,
OUP margin was 3.4%, 2.0% and 3.0% in 2013, 2012 and 2011, respectively. The 2013 margin increase in the United
States was due to declines in salary-related and lease costs as a result of the cost recalibration plan, the 2012 legal costs
and the improvement in the gross profit margin as noted above, partially offset by the increase in restructuring costs. Other
Americas OUP margin was 2.8%, 3.2% and 3.2% in 2013, 2012 and 2011, respectively. The decrease in the Other Americas
OUP margin was due to the increase in restructuring costs in 2013 compared to 2012. The margin decrease in the Americas
in 2012 was primarily due to the United States as a result of the restructuring and legal costs noted above, as well as
expense deleveraging as we did not decrease expenses as quickly as revenues declined.
Americas Operating
Unit Profit
In Millions ($)
Americas Revenues
In Millions ($)
’11
’12
’13
4,595.9
4,649.4
4,510.2
’11
’12
’13
111.4
141.9
143.7