Bleak December spurs Manpower to withdraw profit forecast

BOSTON (Reuters) - Staffing services company Manpower Inc withdrew its fourth-quarter profit forecast on Monday, saying demand for temporary workers had been light in December as a spreading global recession prompted U.S. industrial firms to idle plants to cut costs.

The company in October had told investors it expected fourth-quarter profit to come to 97 cents to $1.01 per share. That was below the $1.43 per share analysts had expected. Its shares fell about 12 percent on the news, weighing the entire staffing sector.

"What we are hearing and seeing in December is a little bit of a vapor lock as companies are really trying to figure out how to reduce their inventory and at the same time reduce their personnel cost," said Jeffrey Joerres, chief executive of the world's No. 2 staffing company.

While businesses across all sectors of the economy are laying off workers to cope with the recession, others are trying to cut costs without firing as many people.

Most prominently, Detroit's troubled automakers General Motors Corp , Chrysler and Ford Motor Co are extending their holiday plant shutdowns longer than usual.

Heavy equipment maker Caterpillar Inc said on Monday it would impose temporary factory closings and cut salaries across the company.

Package-delivery company FedEx Corp last week said it would impose a 5 percent pay cut on most salaried workers and suspend its contributions to employee retirement accounts.

The Standard & Poor's 1500 professional services index <.15GSPPS> fell 4.4 percent.

SHARP REVENUE FALL

Manpower's revenue fell 20 percent in October and November, hurt by the strengthening dollar. Factoring out currency fluctuations, revenue would have declined 11 percent.

Wall Street expected revenue to fall 12.3 percent in the quarter, with analysts on average looking for $4.94 billion in revenue, down from $5.63 billion a year earlier, according to Reuters Estimates.

Investors had expected per-share earnings to tumble 42 percent to 96 cents.

The company said it expects an unspecified fourth-quarter charge for employee severance and office closings.

"The withdrawal of Q4 guidance reinforces our view that 2009 earnings outlook is weak and visibility for 2009 and beyond is poor," wrote Kelly Flynn, analyst at Credit Suisse. "A key to the outlook for 2009 will be how quickly and at what rate demand returns in January."

The company, which trails Switzerland's Adecco SA , said that some clients who normally would end holiday idle periods around the first Monday of the new year -- January 5, are indicating they may extend holiday shutdowns by a week until January 12.

Manpower shares fell $4.44 to $31.96 on the New York Stock Exchange.

Among Manpower's NYSE peers, Spherion Corp fell 13.8 percent and Robert Half International Inc slid 4.8 percent and Monster Worldwide Inc eased 3.2 percent. On the Nasdaq, Hudson Highland Group Inc tumbled 17.9 percent and Kelly Services Inc slipped 7.2 percent.

So far this year, Manpower shares are down 43.9 percent so far this year, a deeper slide than the 40.2 percent decline of the broad Standard & Poor's 500 index <.SPX>.

(Reporting by Scott Malone, additional reporting by Mary Meyase in Bangalore, editing by Dave Zimmerman, Derek Caney and Gunna Dickson)

WhatsAppFacebookTwitterLinkedinBeloudBluesky