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Manpower Inc. (MAN) posted a 40% decline in fourth-quarter net profit on a "rapid" decline in demand as the staffing agency continues to cut costs, forecasting continued deterioration in the labor market.

Chairman and Chief Executive Jeffrey A. Joerres said the drop in demand, which was expected, was across most of its geographic markets. He said Manpower, the second-largest staffing agency by sales behind Switzerland's Adecco SA (ADEN.VX), is in a good position to cope with the drop in demand.

Manpower reported net income of $79.2 million, or $1.01 a share, compared with $133.1 million, or $1.63 a share, a year earlier. The latest quarter included a per-share gain of 47 cents for a tax refund and a 35-cent per-share restructuring charge as the stronger dollar pared per-share earnings by 10 cents.

Revenue fell 18% to $4.59 billion, or 10% on a constant currency basis. Although it is U.S.-based, Manpower derives two-thirds of its revenue from Europe, with one-third from France alone.

Analysts surveyed by Thomson Reuters projected earnings, excluding items, of 81 cents a share on revenue of $4.72 billion.

Gross margin rose to 20.8% from 18.6%.

Temporary-staffing agencies like Manpower generally feel the effects of the recession on the work force first, as businesses typically shed temporary workers ahead of permanent staffers. Late last month, Manpower withdrew its fourth-quarter forecast, as revenue fell more sharply than expected, exacerbated by the stronger dollar.

U.S. revenue fell 5.2% as the business swung to a loss. French operations, which have been slumping as the economic troubles spread to Europe, saw profit rise 33%, though revenue fell 28%.

Despite tough times, Manpower is continuing to invest in its operations. Two weeks ago, it launched Mypath.com, a Web site that permits job seekers to contact each other and exchange ideas and experiences, similar to Facebook Inc.'s popular social-networking site.

Manpower's shares closed Monday's session at $27.66, down 2.8%, and weren't active premarket. Shares are down 61% since their 52-week high in May.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com

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