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Currency Effects Hide Ipsos H1 Organic Growth

July 26 2018

Ipsos has reported a 5.7% fall in first half 2018 revenue to EUR 786m from the prior year period, but entirely due to negative currency effects (-7.3%). Organic growth was +1.5% and is predicted to improve in the second half, with a forecast of 2 to 3%.

Organic Growth for IpsosDuring the period, the average value of the US dollar against the euro decreased by almost 12% year-on-year, slightly more than that of the Australian dollar (-9%), and slightly less than the Russian rouble (-15%). The pound sterling held its own better, losing only 2% versus the euro after a big fall the previous year.

For the second quarter alone, revenue was EUR 419m, down 5.6% compared to the period April-June 2017. Currency effects were negative at -6.5%, and the impact of changes in accounting standards (IFRS 15) was also negative at -0.3%. Total organic growth for the quarter (+1.2%) only partly offset these negative elements.


Performance by region and business line

Consolidated revenues by geographical area
(in millions of euros)
1st half
2018

1st half
2017

Change
2018/2017
Organic growth
Europe, Middle East and Africa 352.5 360.4 -2.2% 1.5%
Americas 280.5 318.5 -11.9% 0%
Asia-Pacific 153.0 154.9 -1.2% 5%
First-half revenues 786.0 833.8 -5.7% 1.5%


Reported revenue was down in all regions, and in the Americas organic growth was zero - however Asia Pacific saw organic growth of 5% during the period.


Performance by business line

Consolidated revenues by business line
(In millions of euros)
1st half
2018
1st half
2017
Change 2018/2017
Organic growth
Media and Advertising Research 166.4 177.7 -6.3% 1%
Marketing Research 416.7 444.0 -6.1% 1.5%
Opinion & Social Research 89.9 92.5 -2.8% 5%
Client and Employee Relationship
Management
112.9 119.7 -5.6% 0.5%
First-half revenues 786.0 833.8 -5.7% 1.5%


All business lines showed some organic growth, with Opinion & Social Research once again the pick, rising 5%.


Financial performance - summarized income statement

Financial Performance
(in millions of euros)
1st half
2018

1st half
2017

Change 1st half
2018/2017
Revenue 786.0 833.8 -5.7%
Gross profit 512.7 544.2 -5.8%
Gross margin 65.2% 65.3% -
Operating profit 45.6 50.7 -10%
Operating margin 5.8% 6.1% -
Total of exceptional, non-recurring items (1.4) (7.9) -
Finance change (9.4) (9.7) -2.6%
Tax (8.6) (7.9) 8.6%
Adjusted net profit* attributable to the Group 34.1 36.0 -5.4%
*Adjusted net profit is calculated before non-cash items linked to IFRS 2 (share-based payments), amortisation of acquisition-related intangible assets (client relationships), deferred tax liabilities related to goodwill on which amortisation is tax-deductible in certain countries and the impact net of tax of other non-recurring income and expenses.

* Adjusted net profit is calculated before non-cash items linked to IFRS 2 (share-based payments), amortisation of acquisition-related intangible assets (client relationships), deferred tax liabilities related to goodwill on which amortisation is tax-deductible in certain countries and the impact net of tax of other non-recurring income and expenses.


Operating profit for the first half of the year fell 10% to EUR 45.6m, from the same period in 2017. Concerning operating costs, payroll expenses were down 4.2%, with group headcount rising 0.5%, mainly in emerging countries, to give a permanent headcount of 16,664 at 30 June 2018.

For the full financial year 2018, Ipsos predicts that the company's organic growth will range between 2 and 3%, slightly above the organic growth of this first-half year; while 2018 operating profit will also show a slight increase.

Web site : www.ipsos.com .
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