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World – Kelly Services revenue edges up 1% in third quarter

08 November 2018

Third-quarter revenue at Kelly Services (NASD: KELYA) edged up 1.0% with growth in all three segments amidst what the company called a “challenging talent environment” in the US. The increase was 1.9% in constant currency.

Kelly Services noted Americas revenue reflects continuing growth in Kelly Educational Staffing and PT specialties. In the company’s global talent solutions segment, higher revenue in outsourced solutions offset declines in centrally delivered staffing and payroll process outsourcing. And international staffing revenue growth continued, but at a slower pace.

(USD millions) Q3 2018 Q3 2017 % change % constant currency
Revenue 1,342.4 1,328.8 1.0% 1.9%
Gross profit 239.1 230.7 3.6% 4.5%
Gross margin 17.8% 17.4%  N/A  N/A
Net earnings 33.1 23.0 43.9%  N/A

The company noted a $15.8 million gain on its investment in Japan-based staffing provider Persol Holdings.

Revenue by segment was as follows.

(USD millions) Q3 2018 Q3 2017 % change % constant currency
Americas staffing 561.8 554.8 1.3% 2.0%
Global talent solutions 507.6 503.0 0.9% 1.2%
International staffing 277.2 275.6 0.6% 2.8%

Revenue by geography was as follows.

(USD millions) Q3 2018 Q3 2017 % change % constant currency
Americas        
United States 942.5 941.1 0.1% 0.1%
Canada 37.0 37.1 -0.2% 4.0%
Mexico 32.3 32.9 -1.9% 4.3%
Puerto Rico 28.2 15.9 77.0% 77.0%
Brazil 8.1 12.3 -33.9% -20.8%
Europe, Middle East and Africa        
France 68.8 73.0 -5.6% -4.7%
Switzerland 53.8 59.1 -9.0% -7.0%
Portugal 48.2 46.0 4.5% 5.5%
United Kingdom 28.1 23.3 20.4% 20.9%
Russia 24.0 22.5 7.0% 19.3%
Italy 18.3 15.9 15.3% 16.5%
Germany 13.8 15.5 -10.3% -9.4%
Ireland 11.3 8.3 36.7% 38.2%
Norway 8.8 8.9 -1.7% 1.8%
Other EMEA 3.0 12.1 7.0% 9.3%
Asia Pacific        
Total APAC 6.2 4.9 28.9% 37.5%

Third-quarter gross margin rose in the Americas staffing global talent solutions segments, but narrowed in international staffing. Kelly noted Americas staffing’s gross profit rate was positively affected by lower employee-related costs, while international staffing’s rate was negatively affected by adjustments for employee-related costs and customer mix.

Gross margin by segment was as follows.

  Q3 2018  Q3 2017
Americas staffing 18.9% 17.8%
Global talent solutions 19.2% 18.5%
International staffing 13.2% 14.3%

Kelly in September made an equity investment in Business Talent Group, a business-focused human cloud platform for on-demand consultants, experts and executives.

“The company performed well in the third quarter despite the continuing tight labor market,” said President and CEO George Corona. “Our teams are working on new and innovative ways to close the labor supply gap and we are taking the actions necessary to deliver on the bottom line while continuing to invest in technology for our future.”

The company expects fourth-quarter revenue to be flat to up 1% year over year.

Kelly Services shares were down 3.02% to $24.05 at 12:08 p.m. Eastern time; the company had a market cap of $957.55 million, according to FT.com.

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