EU CONSUMER CYCLICALS: Manpower; 1Q (to March) results (x5)
(MAN; Baa1 Stable/BBB Neg) (equities -16%)
Equites at a 12yr low - becoming more common in the US with underperformers.
Results broadly in line with low expectations for headline fall (-5% YoY) but a sharp EBIT decline (-47% YoY) is more unexpected. It is attributing some of that to restructuring charges tied to ongoing cost-cutting initiatives. Re. 27s we don't see it as distressed risk yet on low leverage (g/n 2.6/1.9x) but equally see it under-priced for uncertainty. Co does not seem concerned about leverage here; FCF of $258m vs. equity pay-outs of $286m last year. FCF trends in 1Q are weak (-$167m vs. +104m last yr) - not much colour given on that outside expectation for seasonal reversal in 2H.
Guidance (2Q25):
- Revenue: -3% to -7% YoY (ex-FX)
- EBITA margin: down ~60bps YoY, implying around 1.9%
Management Commentary:
- Seeing typical cycle evolution: First phase was pullback in temp staffing (already occurred), now hitting perm hiring (15% of profits), especially in lower-skill roles.
- Still seeing solid demand in specialised skillsets.
- Not seeing large layoffs; the issue is uncertainty, not collapse.
- Current trading: April flat vs. March – i.e. no noticeable slowdown or acceleration.
U.S. Underperformance over recent years vs. economic expansion:
- Dismisses technology (LinkedIn/apps) as cause, instead blames post-Covid over-hiring.
- Notes structural shift in tech roles due to AI: U.S. software programmer unemployment at 7% vs. national average of 4.2%.
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