The third-largest market research company in the world, Ipsos has posted revenue of €993.3 million in H1 2021, up 26.4% compared to the same period in 2020.
Overall, Ipsos’ profitability in H1 2021 is significantly higher than in the same period last year, with a record operating margin of 11% compared to a particularly low margin of 3.2% in H1 2020.
Last year, Ipsos’ H1 profitability was hit by the sudden drop in activity from mid-March due to the pandemic. The suddenness of the fall did not allow us to reduce our costs to the same extent in the first half of the year because they were partly fixed and were in line with the initial growth forecast for 2020.
In terms of operating costs, payroll costs rose 7.5%, due to the end of the various salary reduction arrangements that were in place in 2020 (temporary voluntary salary reductions agreed by various employees of between 10% and 20% for executives; shorter working hours; unpaid leave…). Conversely, for the first half of 2021, payroll costs included salary increases that were effective on May 1, 2021, and provisions for bonuses.
That said, payroll costs rose at a much slower pace than the 25.5% increase in gross margin, making it the main driver in improving profitability. This was due to the slower growth in new hires relative to the business: there were 17,166 permanent employees on June 30, 2021, compared with 16,644 at the end-December 2020 and 17,730 on June 30, 2020.
The various cost-saving measures put in place in 2020 meant that it was possible to make up for this shortfall in H2. Ipsos had implemented a plan to reduce costs by €113 million over full-year 2020 compared to 2019. These savings primarily stemmed from payroll costs (€43 million), government subsidies (€29 million) and overheads (€41 million). Of these savings, around €20 million is expected to be repeated in 2021.
Net profit amounted to €72.897 million in H1 2021 while Net profit, attributable to the owners of the parent, amounted to €71 million compared with €1.3 million in H1 2020.
Adjusted net profit, attributable to the owners of the parent, which is the relevant and constant indicator used to measure performance, rose sharply to €81.4 million from €12.8 million in H1 2020.
The gross margin (calculated by deducting external and variable direct costs associated with contract performance from revenue) rose slightly to 64.7% from 64.2% in full-year 2020 and 65.1% in H1 2020.
Other operating income and expenses were minus €4.4 million compared with plus €17.6 million in H1 2020. This consists of severance costs whereas in 2020, the company had received subsidies under the furlough schemes put in place in some twenty countries worldwide, from which the company no longer benefits.
Naturally, this very strong growth is found in all regions, even if the EMEA zone continues to record the best performance thanks to the existence of contracts signed in several European countries at the request of public health authorities.
The Americas – North and South – are recovering well. The Asia-Pacific region, which had a poor start to 2020 as the Covid-19 pandemic appeared in China and then in neighbouring countries earlier than elsewhere, has been in better shape since the spring.
However, it remains the part of the world where Ipsos’ activity is barely greater than in 2019. It declined by 19% organically in the first half of 2020, compared to 9.5% for the EMEA and 15.5% for the Americas. It has grown by 22% in 2021, while EMEA and the Americas grew by 39% and 27% respectively.
The average for Asia conceals significant disparities from one country to another. China has regained good growth while other markets, including Japan, are lagging behind.
Ipsos’ excellent performance is the result of a combination of two factors.
- On the one hand, activity in the first half of 2021 is compared to the same period in 2020, which was in sharp decline due to the lockdown implemented by the health authorities in many markets from February to May. The generalization of lockdowns had led to sudden and unprecedented reduction inactivity, at constant scope and exchange rates, of 13% for the half-year and 26% for the second quarter from 2020.
- On the other hand, the business is inherently strong. Here, the comparison to 2019 takes on its significance. Ipsos’ organic growth rate is 13.9% when the first half of 2019 is used as a basis for comparison. This performance is equivalent to that of the first quarter.