DOW JONES NEWSWIRES
Manpower Inc.'s (MAN) third-quarter loss widened amid $71.3 million of investment losses and goodwill write-downs, as demand remained weak for its staffing services and the effects of a stronger dollar.
While results edged the company's estimates, it also projected fourth-quarter earnings of 17 cents to 27 cents. The average estimate of analysts polled by Thomson Reuters was 28 cents.
Chairman and Chief Executive Jeffrey Joerres said demand remained sluggish, though revenue improved sequentially amid prior cost-cutting efforts.
The employee-recruitment sector remains under pressure from high unemployment despite signs the economy is stabilizing. Manpower derives most of its revenue from Europe, where the job market remains sluggish. In the U.S., most companies don't plan to start hiring anytime soon. Hiring usually lags behind economic recoveries, but this time forecasters predict a prolonged period of joblessness owing to doubts about the recent upturn's durability.
For the third quarter, the No. 2 staffing agency by sales behind Adecco SA (ADEN.VX) reported a loss of $50.4 million, or 64 cents a share, compared with a prior-year loss of $43.2 million, or 55 cents a share. Excluding investment impacts and write-downs, earnings slumped to 26 cents from $1.42.
Revenue decreased 26% to $4.19 billion, and excluding foreign-exchange impacts were down 22%.
The company in July projected earnings of 7 cents to 21 cents on a revenue drop of 29% to 31%, better than analysts expected for the top line at the time.
Gross margin fell to 16.9% from 18.1%.
In its Europe, Middle East and Africa segment, its largest segment, revenue fell 31% and profit tumbled 76%. Still the revenue drop was an improvement from the 40% decline in the second quarter.
The Americas segment revenue fell 19% and earnings were down 69%. Still that was an improvement from the second quarter's loss and 24% revenue drop.
Moody's Investors Service downgraded Manpower's credit ratings to the brink of junk territory in August amid expectations its performance will continue to weaken and will not return to pre-recession levels in the next two years.
Shares closed Tuesday at $60.75 and didn't trade premarket. The stock is up roughly 80% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com