ManpowerGroup may become more European focussed with new CEO
The Milwaukee-based temporary-staffing company announced last month that current co-president, Jonas Prising, will replace Jeff Joerres, becoming the fourth CEO in the company’s 65-year history.
“Jonas is a true global citizen. A native of Sweden, he has lived in nine countries across Asia, Europe and North America and speaks five languages,” Joerres said in a press release. “
Prising’s background, 15-year tenure at the company, and his deep industry knowledge makes him a good choice to lead the company, Joerres said in a press release. Analysts say the choice of Prising seems even more relevant as Manpower continues to emphasize its commercial staffing business and European push.
“Manpower focuses more on the commercial-end market, which is typically industrial professions, or administrative functions,” said Jefferies LLC analyst Trevor Young. Other U.S.-traded staffing companies focus more on professional functions.
Young said the world’s third-largest staffing company’s oversea focus is due to the greater demand in Europe. Last year, just 15 percent of revenue came from United States, which tends to be more developed in the service type industry, rather than manufacturing, Young said.
Manpower has an edge over domestic competitors such as Robert Half and On Assignment, because it focuses on a different market. However, Manpower faces stiffer competition for European commercial staffing market from European giants Randstad and Adecco. The top three global staffing companies share similar revenue profiles, geographic exposure, and target markets, Young said.
Joerres will step down as CEO in less than two months and assume the role of executive chairman. The 54-year-old leader, who has steered the company for the past 15 years, will focus on clients and external relationships.
Young doesn’t think the change to Manpower’s executive leadership is a “management shakeup or knee-jerk reaction.”
“We think it was well-planned on their part. Even though they haven’t communicated to the marketplace, they were looking to make a change,” he said.
The markets didn’t fluctuate much since the company made the announcement Feb. 11. However, ManpowerGroup’s stock has doubled during the course of last year. Its year-end earnings increased 45.8 percent to $288 million, with more than 64 percent of its revenue coming from Europe.
William Blair & Co analyst Timothy McHugh said the company has beaten their estimates every quarter since 2009, with particularly strong performance in the last year.
McHugh attributed Manpower’s improved profitability to legislatively mandated changes to the French payroll tax credit in 2013. France is the company’s single biggest market, McHugh said in a research note in January.
After announcement of the leadership change, analysts’ prediction was for stock to outperform.
Management’s aggressive effort to cut down nearly $200 million in Manpower’s selling general and administrative expenses is starting to shine through, according to the company’s latest financial report. In an effort to drive the company’s operating margin toward its long-term target of four percent, the company has been focusing more on operational performance over the last year, McHugh said.
Analysts expect Manpower to continue with the cost-saving initiatives it has in place after Prising takes over the office in May.
Written by: Rose Zhou