UPDATE 2-Weak French economy drags on Manpower's revenue

Mon Jul 21, 2014 1:09pm EDT

* Sees 3rd-qtr profit of $1.46-$1.54/shr vs est $1.45

* 2nd-qtr revenue $5.32 bln vs $5.30 bln

* French economy still in first gear - CFO

* Shares fall as much as 5 pct (Adds CFO and analysts quotes; updates shares)

By Ankit Ajmera

July 21 (Reuters) - Staffing company ManpowerGroup Inc said its weak performance in France dragged on the company's revenue in the second quarter, sending its shares down as much as 5 percent.

Manpower's average daily revenue in France, which accounts for more than a quarter of the company's total revenue, rose 2 percent in the second quarter.

The rate of growth in the quarter was the same as the first quarter, the company said.

"(France) is one of the economies in Europe that's still stuck in first gear, trying desperately to get into at least second gear," Manpower Chief Financial Officer Mike Van Handel said on a conference call with analysts.

France, the company's largest market, has lagged a recovery in other European countries this year. The country's economy grew only 0.2 percent in the second quarter after stalling in the first.

"Some investors had expected a bit more acceleration (in France), particularly looking forward over the next few quarters," RBC Capital Markets analyst Gary Bisbee told Reuters.

Manpower's total revenue rose 5.6 percent to $5.3 billion in the quarter ended June 30, helped by a healthy recovery in the overall European job market.

Still, that was not enough to impress investors used to handy beats in the past few quarters. The stock, which had risen 21 percent in the year to Friday's close, was down 4 percent at $79.80 by early afternoon.

As well, analysts said they expected Manpower's earnings growth to slow this year.

"The pace of (earnings) growth is slowing despite modest acceleration in revenue as 2013 cost reductions have lapsed," Bisbee said.

Manpower shut offices and cut jobs last year after the eurozone debt crisis paralyzed job markets in 2012.

Manpower said on Monday it expects earnings of $1.46-$1.54 per share for the current quarter, compared with the average analyst estimate of $1.45, according to Thomson Reuters I/B/E/S.

The staffing sector is generally seen as a barometer of economic health, as changes in employment in the staffing industry coincide with changes in the overall economy.

Net income increased 61 percent to $109.8 million, or $1.35 per share, from a year earlier when it took a restructuring charge of $14.4 million.

Analysts had expected earnings of $1.33 per share. (Editing by Savio D'Souza and Saumyadeb Chakrabarty)

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