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Organic Growth for Ipsos after Buoyant Second Half

March 1 2018

Ipsos has reported full-year revenue of EUR 1.78bn - virtually the same figure as 2016 and 2015. However, after allowing for the strength of the Euro vs the dollar and pound, organic growth was 2.4%, reflecting a strong second half to the year.

In the fourth quarter of 2017, revenue in constant terms was EUR 512.5m, down 0.9% in comparison to the prior year period. Allowing for currency fluctuations however, Q4 organic growth was +4%, the firm said, almost as 'vigorous' as that recorded in the 3rd quarter.

By Geographical Area

Consolidated revenues by geographical area
(in millions of euros)

Organic growth
Europe, Middle East and Africa 767.6 760.3 1% 3.5%
Americas 688.5 711.3 -3.2% -0.5%
Asia-Pacific 324.4 311.1 4.3% 6.5%
Full-year revenues 1,780.5 1,782.7 -0.1% 2.4%

Emerging countries, which accounted for 33% of Ipsos activity in 2017 (compared with 32% in 2016), continued to grow - at 4.6% on a constant currency basis - while the developed countries grew at 1.4%. Among the major regions, Asia-Pacific performed best with growth of 6.5%, driven by China, India, Indonesia and smaller markets such as Vietnam and the Philippines.

Very 'positive results' were noted in the UK, Russia and Turkey, as well as in Spain, Poland, the Czech Republic, West Africa, and several markets in the Middle East - particularly Dubai. Other Western European markets, including France and the Scandinavian countries, and certain countries such as Egypt and Kenya, contributed less or not at all. Lastly, the Americas region was described as 'lacklustre', posting annual growth of -0.5%.

The regional picture contrasts with that painted by WPP in results also posted today - Asia Pacific was said to be 'particularly difficult' for Kantar. The only country or region mentioned positively by both global groups was the UK. [No doubt analysts will say this is 'in spite of Brexit' and that they 'expect it however to decline next year', as they always do - Ed.]

By Business Line

Consolidated revenues by business line
(In millions of euros)
Change 2017/2016
Organic growth
Media and Advertising Research 385.7 388.1 -0.6% 1.5%
Marketing Research 944.9 961.5 -1.7% 1%
Opinion & Social Research 189.1 177.2 6.7% 9%
Client and Employee Relationship
260.8 255.9 1.9% 3.5%
Full-year revenues 1,780.5 1,782.7 -0.1% 2.4%

Ipsos Public Affairs continued to 'grow rapidly', with organic growth of 9% for 2017 and 8.5% for the fourth quarter; while Ipsos Loyalty posted annual growth of 3.5% and 6.4% between October and December. The larger divisions Ipsos Marketing and Ipsos Connect saw 'modest rates of growth': of 1% and 1.5% respectively.

Financial Performance

Financial Performance
(in millions of euros)
Revenue 1,780.5 1,782.7 -0.1%
Gross profit 1,156.7 1,160.4 -0.3%
Gross margin 65.0% 65.1% -
Operating profit 182.3 180.1 1.2%
Operating margin 10.2% 10.1% -
Other operating income and expense (14.3) 0.1 -
Finance costs (20.4) (20.8) -2.1%
Income tax (14.6) (44.3) -67.0%
Net profit (attributable to the Group) 128.5 106.9 20.2%
Adjusted net profit* attributable to the Group 127.4 121.7 4.7%

*Adjusted net profit is calculated before (i) non-cash items related to IFRS 2 (share-based compensation), (ii) amortisation of acquisition-related intangible assets (client relations), (iii) the impact net of tax of other non-current income, (iv) expense and the non-monetary impact of changes in puts in other financial income and expenses, (v) deferred tax liabilities related to goodwill for which amortisation is deductible in some countries.

For 2017, gross profit was described as 'nearly stable' at -0.3%. The ratio of gross profit/revenue was 65.0% versus 65.1% in 2016, affected by a combination of factors. Good price maintenance, computerised data collection (which is now 52% of Ipsos' survey business) and the growth of New Services (+17%), enabled gross profit to increase; while Ipsos says the service/product mix is less favourable since growth is higher in those businesses where Ipsos manages large-scale contracts, notably in social research in the UK and the US, and whose gross profit is automatically lower.

Outlook for 2018

In a statement, the firm said that 2018 is expected to grow at a pace similar to that observed in 2017, and that operating profit will show a slight increase.

Web site: www.ipsos.com .

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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