Manpower Inc (MAN.N) reported a much better-than-expected fourth-quarter profit as cost cuts stabilized margins in its struggling markets such as France, and the world's No. 3 staffing company said a "modest recovery" is likely in 2013.
Shares of Manpower rose 7 percent to $51.89 in morning trading -- their highest in the last 18 months.
Milwaukee, Wisconsin-based Manpower, which derives most of its sales and profit overseas, has been under pressure from a weak economy in Europe, where many companies have cut back on hiring.
Manpower, however, said it was "too early to call a bottom" as most markets in Europe would continue their decline in terms of demand.
"Clearly, the patient is not off the recovery table yet but continuing to have better vital signs," Chief Executive Jeffrey Joerres said on a conference call with analysts.
The company said it is focused on boosting the margins further through more cost cuts and better pricing.
Manpower generates about two-thirds of its sales from Europe. Revenue from France, where most of its European business is concentrated, fell 13 percent to $1.31 billion in the quarter ended December 31.
"There have been some stabilization across almost all of the geographies, particularly Europe, that may prove to be fleeting ... But, over the year 2013, we will be able to see a modest recovery," Joerres said.
The company forecast first-quarter earnings of 40 cents to 48 cents per share, before items, that largely beat analysts' expectations of 41 cents per share.
Manpower, whose clients include Deutsche Bank (DBKGn.DE), Novartis NOVN.VX and Cisco Systems (CSCO.O), cut costs by 4 percent in the fourth quarter.
The company's earnings fell to $53.3 million, or 68 cents per share, in the quarter, from $63.6 million, or 78 cents per share, a year earlier.
Excluding items, it earned 91 cents per share. Analysts on average had expected per-share earnings of 77 cents, according to Thomson Reuters I/B/E/S.
Revenue fell 5 percent to $5.20 billion, but was still above expectations of $5.13 billion.
Shares of the company, which has a market value of about $3.80 billion, were up 6 percent at $51.31 in midday trading on the New York Stock Exchange.
(Reporting by Bijoy Koyitty in Bangalore; Editing by Sriraj Kalluvila, Maju Samuel)