Currency Effects Hide Ipsos H1 Organic Growth

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%.

During 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 .