Daily Research News Online no. 35390 - Ipsos Confident of 'Business as Usual' after Solid Q2

Ipsos Confident of 'Business as Usual' after Solid Q2

July 25 2023

Ipsos has announced results for the second quarter of 2023, returning to very modest organic revenue growth thanks to a strong performance in emerging markets. The group says its business is 'returning to a more usual pattern' after Covid and is on course for a good year.

Ipsos results Revenue for the first half of the year was EUR 1,087.1m, down 3.1% on last year - this includes an organic decline of -1.1%, and -1.8% from currency effects. After decline (-2.8%) in the first quarter, the group saw organic revenue growth of 0.5% in Q2. Operating profit fell from EUR 123.7m in the first half of 2022 to EUR 89.9m a year later - but again is expected to recover well in the second half.

By Region

Ipsos reported 'solid' growth momentum in emerging countries (close to 9%) and a decline in business of nearly 5% in developed countries. EMEA revenue declined by 1% (organic) due mainly to the end of the major Covid contracts - excluding these growth was nearly 4%. Revenue in Latin America saw organic growth of 8% plus, but in North America it declined by 4%. The group blames the last on tough comparatives, a drop in demand from major tech customers, and contract delays in the Public Affairs business in the United States.

The Asia-Pacific region posted organic growth of 3%, with a clear upturn in the 2nd quarter (7% compared with -2% in the first quarter), driven by very good momentum in India and Southeast Asia. Revenue in China climbed by 6.5% in Q2, but has rebounded slower than in western countries after their own lockdowns.

By Business Line (Audience)

Ipsos' Consumer business grew by 5% in Q2 and by 3% in H1 as a whole, on top of organic growth of 14% last year. Clients and employees business was stable overall, following strong growth last year; while Doctors and patients, and particularly Citizens saw declines as Covid contracts ended, but without the effect of this Citizens would have grown organically by 3.5%. The firm says the order book for its healthcare business line has grown organically close to 9% since January.

In terms of overall outlook, the company states: 'As we are in the midst of a recovery and our business is returning to its usual cyclical pattern, first-half results will be less than half of full-year 2023 results.

'The order book is a better forward-looking indicator. It continues to accelerate, with organic growth of 2.6% at the end of June (4.1% excluding the impact of Covid contracts), thanks to 5.3% growth in the 2nd quarter alone.

'This lag between revenue growth (-1.1%) against order book growth (+2.6%) will automatically be absorbed in the second half of the year, leading to revenue growth catching up by 3.7%. This does not take into account the expected further acceleration in orders over the coming months'.

The group also says it is 'returning to a more usual annual pattern, both in terms of business and revenue': 2022 was unusual in having a stronger first half than second half, whereas historically, the first half of the year accounts for around 45% of full-year revenues and 26% of operating margin.

All these factors mean that, against a backdrop of global uncertainty, we are maintaining our guidance for 2023, with organic growth of around 5% and an operating margin of around 13%. This is based in particular on our belief that business will rebound in the United States in the second half of the year.

Group home page: www.ipsos.com .