First quarter of 2016: A good market, a good quarter

Organic growth has been significantly sustained at 3.7%. Last year, on a like-for-like basis, Ipsos had posted growth of 0.8% for the first quarter before more sluggish performance in subsequent quarters.
In 2016, the situation is different. This first quarter result reported in euros is the best Q1 result ever recorded. Most importantly, this marks a return to significant growth, with the best quarter growth rate since Ipsos' acquisition of Synovate in October 2011. This good performance should not be underestimated as it concerns all regions, both emerging economies (+4.6%), which had shown signs of weakness last year, and developed markets (+3.3%).

Furthermore, exchange rates, which had been highly favourable at the beginning of last year, are negative (-3.2%). This effect is partially offset by the positive impact of the change in scope (+1.4%) following the consolidation of RDA Group from 1 July 2015.

OUTLOOK FOR 2016
It is widely considered that the economic outlook for 2016 is reassuring. Of course, the days of exceptionally high economic growth rates are well behind us. The consensus points to rather more subdued long-term growth, driven or accompanied, as you prefer, by stable prices.
However, within that long-term trend, the news is good for 2016, in particular regarding household consumption. In China, in the United States, and in France (!), consumers have become more active, perhaps under the impulse of marketing spends which, as we have already emphasized, are on an upward trend.
In this generally positive environment and with its renewed offering embodied by its New Services, Ipsos achieved better growth between January and March 2016, outperforming the growth rates of any of the past 17 quarters.
At constant scope and exchange rates, Ipsos recorded a 16.2% increase in the first quarter revenue of its New Services, compared with the same period in 2015. Note that the performance recorded in emerging markets (+19%) is similar to that achieved in developed economies (+15.5%). The potential for future growth remains considerable, since many of the New Services have only been offered by Ipsos for a few months. Moreover, as a whole, they only account for 10.7% of the Company's total revenue (compared with 9.6% the previous year).
They confirm the main diagnosis established by Ipsos in the summer of 2014, when the "New Way" programme was being set up. The difficulties encountered by the leading market research companies – including Ipsos – to return to a path of significant, sustainable and profitable growth are not due to insufficient demand from their clients, but due to time required to transform the offer.
Benefiting from the upward trend in the marketing services industry and the first impacts of its transformation programme, Ipsos recorded a good performance in the first quarter of 2016. This trend should continue in the next quarters, but of course, it is not possible to assert, at this point in time, that the performance for the whole of 2016 will match that of the first months of the year.
Ipsos will continue to invest in its New Services; improve its efficiency, speed and flexibility; share its know-how and ideas with its clients to an even greater extent; make more efforts to become a household name; and ensure that its teams have the required resources to be fully effective.
In these circumstances, Ipsos will be in a position to record satisfying organic growth in 2016, to maintain its operating margin, and to generate a significant amount of surplus cash, which should allow it to continue to reduce its debt and perhaps seize one or more targeted acquisition opportunities.