ManpowerGroup 2014 Annual Report Download - page 34

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32
7,509.7
7,237.0
7,250.9
2014
2013
2012
Southern Europe Revenues
($ in millions)
361.7
264.6
185.1
2014
2013
2012
Southern Europe Operating Unit Profit
($ in millions)
Southern Europe — In 2014, revenues from services in Southern Europe,
which includes operations in France and Italy, increased 3.8% (3.8% in
constant currency and 3.6% in organic constant currency) compared to
2013. In 2014, revenues from services increased 1.2% in constant currency in
France (which represents 71.3% of Southern Europe’s revenues) and
increased 8.1% in organic constant currency in Italy (which represents 15.7%
of Southern Europe’s revenues). The increase in France was due primarily to
market share gains in a stabilizing market. The increase in Italy was mostly
due to increased demand for our Manpower staffing services as clients opted
for more flexible labor solutions given the current economic conditions and a
27.4% constant currency increase in the permanent recruitment business,
partially offset by three fewer billing days in 2014 compared to 2013. In Other
Southern Europe, revenues from services increased 13.3% (13.7% in constant
currency and 12.2% in organic constant currency) in 2014 compared to 2013 driven by the revenue increase in Spain due
to improving economic conditions and clients acquired from a local competitor in July 2013.
In 2013, revenues from services in Southern Europe decreased 0.2% (–3.6% in constant currency and –3.9% in organic
constant currency) compared to 2012. In 2013, revenues from services decreased 6.0% in organic constant currency in
France and decreased 0.3% in constant currency in Italy. The decrease in France was due primarily to softening demand in
the staffing/interim business and a 23.5% decline in constant currency in the permanent recruitment business. The
decrease in Italy was due to a slight decrease in our staffing/interim services. In Other Southern Europe, revenues from
services increased 12.5% (7.9% in constant currency and 6.1% in organic constant currency) in 2013 compared to 2012
driven by the revenue increase in Portugal, due to increased demand in the Manpower staffing and ManpowerGroup
Solutions businesses, and in Spain, due mostly to an acquisition of some clients from a local competitor in July 2013.
Gross profit margin increased in 2014 compared to 2013 due to strong price discipline, enhanced CICE payroll tax credits
in France and an increase in our permanent recruitment business, partially offset by the continued pricing pressures in
some markets. In 2013, gross profit margin increased compared to 2012 due primarily to the CICE payroll tax credit in
France, which was partially offset by the additional social security reserve recorded in France in 2013, the decrease in our
permanent recruitment business, and pricing pressures in the small/medium-sized business in France and in Italy that
unfavorably impacted staffing/interim gross margins.
In 2014, selling and administrative expenses decreased 0.1% (–0.1% in constant currency and –0.2% in organic constant
currency) compared to 2013. The decrease was due to the decline in non-personnel related costs as a result of the
simplification and cost recalibration actions taken in 2013 and the $7.8 million of restructuring costs incurred in 2013 that
did not recur in 2014, partially offset by an increase in organic salary-related costs, because of an increase in our variable
incentive-based costs due to improved operating results. In 2013, selling and administrative expenses decreased 3.8%
(–6.9% in constant currency and –7.2% in organic constant currency) compared to 2012 primarily related to the decrease in
organic salary-related costs due to lower headcount, partially offset by an increase in restructuring costs to $7.8 million
recorded in 2013 compared to $3.8 million in 2012 and the additional recurring selling and administrative costs resulting
from the 2012 Damilo acquisition in France.
OUP margin in Southern Europe was 4.8%, 3.7% and 2.6% for 2014, 2013 and 2012, respectively. OUP margin increased
in 2014 primarily due to France, where the OUP margin was 5.1%, 3.8%, and 2.4% in 2014, 2013 and 2012, respectively.
France’s margin increase in 2014 was due to the improvement in our gross profit margin and improved operational leverage
as we were able to support the higher revenue level with lower expenses. Italy’s OUP margin was 5.4%, 4.9% and 4.3% in
Management’s Discussion & Analysis
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations