Ipsos Confident of 'Business as Usual' after Solid Q2

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.

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 .