ManpowerGroup 2014 Annual Report Download - page 36

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OUP margin for Northern Europe was 3.3%, 2.4% and 2.8% in 2014, 2013 and 2012, respectively. The increase in 2014 was
the result of better operational leverage, as we were able to support the higher revenue levels with lower expenses, partially
offset by a decline in the gross profit margin. The OUP margin declined in 2013 as the decrease in compensation-related
expenses and lease costs as well as additional cost savings from the simplification and cost recalibration actions was not
enough to offset the decrease in the gross profit margin and the increase in restructuring costs in 2013.
2,327.1
2,447.7
2,728.8
2014
2013
2012
APME Revenues
($ in millions)
84.2
70.8
90.7
2014
2013
2012
APME Operating Unit Profit
($ in millions)
APME — Revenues from services decreased 4.9% (–0.1% in constant
currency and –0.6% in organic constant currency) in 2014 compared to 2013.
In Japan (which represents 36.0% of APME’s revenues), revenues from
services decreased 9.3% (–1.7% in constant currency) as we were challenged
to recruit candidates in a tight labor market even though we experienced
gradual improvement in demand for our staffing/interim services, partially
offset by the increase of 10.5% in constant currency in the permanent
recruitment business. In Australia (which represents 22.8% of APME’s
revenues), revenues from services were down 7.7% (–1.0% in constant
currency and –2.3% in organic constant currency) in 2014 compared to 2013
due to the decreased demand for our staffing/interim services, partially offset
by a 13.0% increase in constant currency in the permanent recruitment
business. The remaining revenue decrease in APME is due to the staffing/
interim revenue decline in China as a result of legislative changes that
restricted the use of temporary employment and a general softening of demand in the market.
In 2013, revenues from services for APME decreased 10.3% (–1.4% in constant currency) compared to 2012. In Japan,
revenues from services decreased 3.7% in constant currency in 2013 due primarily to soft demand for our staffing/interim
services as a result of legislative changes and fewer billing days in 2013 compared to 2012, and the run-off of a large TBO
client contract that began to wind down in early 2013, partially offset by a 31.7% increase in constant currency in the
permanent recruitment business. In Australia, revenues from services were down 6.6% in constant currency compared to
2012 due to the decreased demand for interim services in our Experis business line, partially offset by an increase in the
permanent recruitment business.
Gross profit margin increased in 2014 compared to 2013 due to an increase of 8.3% in constant currency in our permanent
recruitment business. In 2013, gross profit margin decreased due to a decrease in our staffing/interim gross profit margin
from modest pricing pressures and change in business mix, as well as the 5.3% decline in constant currency in our
permanent recruitment business.
Selling and administrative expenses decreased 8.0% (–3.0% in constant currency and –4.3% in organic constant currency)
in 2014 compared to 2013 related to reduced organic salary-related expenses due to lower headcount, a decrease in lease
and office-related costs as a result of the simplification and cost recalibration actions taken in 2013 and $6.2 million of
restructuring costs incurred in 2013 that did not recur in 2014, partially offset by the additional recurring selling and
administrative costs resulting from acquisitions. In 2013, selling and administrative expenses decreased 10.4% (–1.6% in
constant currency) compared to 2012 related to reduced compensation-related expenses such as salaries and variable
incentive-based costs due to lower headcount, partially offset by an increase in restructuring costs to $6.2 million recorded
in 2013 compared to $0.7 million in 2012.
Management’s Discussion & Analysis
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of operations