Manpower profit slumps on Europe, stronger dollar

NEW YORK, Fri Jul 20, 2012 – Global staffing services provider ManpowerGroup on Friday reported sharply lower quarterly profit that beat Wall Street expectations as Europe’s major economies weakened and a stronger dollar reduced results.
Net earnings fell 44 percent to $41 million, or 51 cents per share, from $72.7 million, or 87 cents per share, a year ago.
Excluding one-time reorganization and other charges, Manpower earned 76 cents a share, 5 cents ahead of average analyst estimates according to Thomson Reuters I/B/E/S.
“Europe, which comprises 65 percent of our business, not surprisingly experienced the most decline in the quarter,” CEO Jeff Joerres said.
Sales fell 8 percent to $5.21 billion, meeting Wall Street estimates. Manpower saw double-digit sales declines in France and Italy but smaller drops in northern Europe.
Milwaukee-based Manpower is less reliant on European markets than rival Randstad, but more than Adecco or any of its U.S.-listed peers, according to BMO Capital Markets.
The stronger dollar hurt earnings by 7 cents in the quarter and will affect third-quarter earnings by 8 cents a share, Manpower said. It forecast third-quarter profit of 64 cents to 72 cents a share, while analysts were expecting 79 cents.

GM CEO sees European losses continuing for 1-2 years

SAN FRANCISCO – Thu Mar 8: General Motors Co. chief executive Dan Akerson said it may be two years before its European division is back in profit as the continent sheds over-capacity the same way the U.S. industry had to over the past half decade.

The world’s largest automaker has lost money in Europe for the last 12 years.

“I think it’ll be a good year or two before we can achieve profitability in Europe again,” Akerson said at an on-stage interview conducted in San Francisco on Wednesday night.

European sales had been recovering before the continent became gripped by fears of debt defaults in the middle of last year, Akerson said at the Commonwealth Club of California, a non-profit public affairs forum.

“People stopped buying. I can see it every day in the sales reports,” said Akerson, who was born in California and studied at the London School of Economics.

Industry-wide, Akerson believed there were between seven and 10 excess car plants in Europe and other executives estimate there is 20 percent over-capacity there.

He emphasized that a deal with France’s PSA Peugeot Citroen announced last week was merely an alliance and that each carmaker had its own problems to solve.

GM announced last week that it would halt production of the Chevy Volt plug-in electric car for five weeks and temporarily lay off 1,300 U.S. workers.

But Akerson, arguing that a two-week production shutdown last year for its popular Cruze compact car did not generate as much concern, dismissed the worries surrounding the Volt as political.

“Sometimes I feel bad for President Obama,” Akerson told reporters, saying the Volt was in the works long before Obama’s election, yet it was seen as his car due to the government’s 27 percent stake in GM after its bailout. “It’s not the Obama car.”

Akerson had said earlier that, while it was not up to him, his ideal outcome would be for the government to, for example, sell off the stake steadily over 10 quarters because he believed uncertainty about it was weighing on GM’s share price.

Obama’s re-election campaign often touts the auto sector bailout as one of the Democrat’s major accomplishments as president, seeking to draw a contrast with Republican White House contender Mitt Romney, who opposed it.

Starbucks tries local touch to lift growth in Europe

SEATTLE –  Wed Mar 7: Starbucks Corp., the world’s biggest coffee chain, is hoping to boost growth in Europe, the Middle East and Africa by opening so-called concept stores that tailor products and cafe interiors to local tastes, a senior manager told Reuters.

Starbucks will open between five and 10 such stores in the region this year, Rich Nelsen, senior vice president for Starbucks’ Europe, the Middle East and Africa business, said in an interview.

Those cafes will test new products, such as fresh-baked pastries, as well as exclusive coffees from small-scale farms, “If these new products and the other concepts we test here work, we will expand these to other countries,” he said.

On Friday, Starbucks will open its first European concept store in Amsterdam, followed by one in Kuwait later this year.

Concept stores test new Starbucks products and sales ideas while their design and interior are inspired by the particular city and country where they are located.

The store in Amsterdam will be its biggest in Europe at 430 square meters. Apart from its larger size and assortment with 16 new food products that are only sold here, the new concept store stands out because of its design.

Located in a former bank building, it will have locally sourced secondhand furniture and feature typical Dutch touches, such as stools resembling bike saddles and traditional Dutch blue and white tiles.

Fed will protect U.S. from Europe fallout: Bernanke

WASHINGTON – Europe’s financial crisis still threatens the U.S. recovery, and the Federal Reserve will do everything it can to protect against damage to the economy, Fed Chairman Ben Bernanke said on Thursday.

Bernanke told Congress he was seeing signs that some of the uncertainty limiting U.S. business investment, including European banking woes, might be waning.

But he said it was far too soon to say whether the United States could remain unscathed.

“Risks remain that developments in Europe or elsewhere may unfold unfavorably and could worsen economic prospects here at home,” Bernanke told the House of Representatives Budget Committee.

Bernanke defended the U.S. central bank’s ultra-easy monetary policy from criticism from Republican lawmakers that it risked fueling inflation and undermining the dollar.

He was also taken to task by Republicans for a report the Fed issued last month that offered possible prescriptions to Congress and regulators on how to fix the housing market.

The U.S. economy accelerated in the fourth quarter and job growth has picked up, but the unemployment rate still stood at a lofty 8.5 percent in December – a level Bernanke made clear the U.S. central bank was not satisfied with.

He warned the debt troubles in Europe risked undermining the U.S. recovery.

“We are in frequent contact with European authorities, and we will continue to monitor the situation closely and take every available step to protect the U.S. financial system and the economy,” Bernanke said.

European leaders are haggling over how best to erect a firewall to prevent their debt crisis from spreading. At the same time, Greece is under pressure to clinch a deal with private creditors to make its debt load more manageable.

Many economists believe austerity moves throughout the euro zone have already tipped the region into recession.