By Tommy Kilgore
More companies across industries are “resetting their workforce”, says Manpower CEO
Shares of employment services company ManpowerGroup fell Thursday toward their worst one-day post-earnings performance in five years, as sluggish job demand due to increased economic uncertainty led to another earnings miss and a downbeat outlook.
(MAN) stock was down 6.4% in afternoon trading, putting it on track to close at its lowest price since Oct. 19, 2024. The stock was also on course for its worst quarterly earnings reaction since it plunged 14.5% on April 20, 2018.
The company said in January that it saw a “softening in demand” for employment services in the fourth quarter, but added that labor markets remained strong and order flow remained healthy. Although ManpowerGroup missed profit forecasts for that quarter, it did provide earnings forecasts for the first quarter that were above expectations.
This demand forecast appears to have changed over the past three months.
“This weak trend continued in the first quarter of this year, as demand for staffing services slowed further, most notably in the United States,” CEO Jonas Prissing said on a post-earnings conference call with analysts, according to a transcript from AlphaSense.
In Europe, the company saw a “slight decline in demand” in most of the region’s key markets, while business trends in Asia Pacific, the Middle East and Latin America were “very strong,” Breising said.
Net income fell to $77.8 million, or $1.51 per share, from $91.6 million, or $1.68 per share, in the same period last year. Excluding one-time items, adjusted earnings per share of $1.61 came in below the average analyst estimate of $1.63 compiled by FactSet.
Revenue fell 7.6% to $4.75 billion, below the FactSet consensus of $4.81 billion.
CEO Breising said that after months of a “remarkably strong” US job market, he’s seeing more companies across industries “resetting their workforces.” He said these companies are shifting their focus toward more “deliberate” hiring of specialized skills, delaying hiring decisions and reducing demand for emergency workforce, which is in line with what he saw in previous economic slowdowns.
Revenue in the US fell 13.4% to $770 million, which was less than forecasts of about $831 million, according to FactSet.
Based on trends seen during the first quarter and so far in April, the company said it expects EPS for the second quarter to be between $1.58 and $1.68, well below the FactSet consensus of $1.84.
The sell-off in ManpowerGroup shares seemed to weigh on the shares of other employment services companies, as Robert Half International Inc. fell. (RHI) down 0.5% and Korn Ferry’s (KFY) lost 0.5%.
Year-to-date, ManpowerGroup shares are down 10.6%, while the S&P 500 is up 8%.
Tommy Kilgore
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23-04-20 1353 AH
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