By Ritika Rai
(Reuters) - ManpowerGroup Inc <MAN.N>, the world's No.3 staffing company, reported a strong adjusted quarterly profit as cost cuts propped up margins even though European sales declined sharply, and said margins could slightly expand in the second quarter.
Manpower shares rose as much as 10 percent to $57.54 in morning trading, their highest in the last 21 months. They were up 4 percent at $53.47 on the New York Stock Exchange on Friday.
Macquarie Securities analyst Kevin McVeigh said part of the saving came from IT initiatives, streamlining some areas of managements, and reducing some overhead at existing offices. He said these initiatives turned out to be "much better than what was expected".
Manpower forecast second-quarter adjusted earnings of 84 cents to 92 cents per share, above analyst estimates of 77 cents. It expects revenue to contract 3 percent to 5 percent in the second quarter.
The company, which has been trying to cut costs for nine months, expects second-quarter margins to stay at first-quarter level of 16.6 percent or rise marginally to 16.8 percent.
"We made sure that there is no redundancy between global headquarters, regional headquarters and national headquarters. We are trying to be very lean ... So, we are recalibrating our costs," Chief Executive Jeffrey Joerres told Reuters.
Manpower earned 63 cents per share in the quarter ended March 31, after adjusting for a charge of 32 cents related to office consolidations and severance costs. Analysts were looking for 45 cents per share, according to Thomson Reuters I/B/E/S.
Revenue declined 6 percent to $4.77 billion. Revenue from France, where most of the company's European business is concentrated, fell more than 11 percent to $1.15 billion.
Milwaukee, Wisconsin-based Manpower's net earnings fell to $23.9 million, or 31 cents per share, from $40.2 million, or 50 cents per share, a year earlier.
"There is still so much yet to be worked on, in the euro zone as well as in the United States. But at least we are in a period of some stability but albeit at a lower level," Joerres said.
(Editing by Sreejiraj Eluvangal and Don Sebastian)