TMCnet News
Teleperformance: First-Half 2018 ResultsRegulatory News: The Board of Directors of Teleperformance (Paris:TEP), the worldwide leader in outsourced omnichannel customer experience management, met today and reviewed the consolidated financial statements for the six months ended June 30, 2018. The Group also announced its half-year financial results. SOLID REVENUE AND EARNINGS PERFORMANCE, DESPITE THE UNFAVORABLE EXCHANGE RATE ENVIRONMENT
SIGNIFICANTLY STRONGER GLOBAL MARKET LEADERSHIP
2018 GUIDANCE RAISED AND REFINED
CONFIRMATION OF 2022 TARGETS
INTERIM FINANCIAL HIGHLIGHTS
* A glossary of alternative performance indicators is included in the Appendix Commenting on this performance, Teleperformance Chairman and Chief Executive Officer Daniel Julien said: "We had a first half with solid revenue growth at constant exchange rates and further gains in our EBITA margin, in line with our full-year 2018 targets. It was also the twelfth straight half-year in which our like-for-like growth (of more than + 8%) outperformed the market (around + 4%), once again confirming our status as a growth company. Increased profitability, achieved in an unfavorable exchange rate environment, reflected strong momentum in Core Services in our most profitable markets as well as in our high-value Specialized Services. Our growth was not only profitable but also controlled, with solid margins and excellent liquidity management discipline both reflected in continued strong cash flow generation. This healthy performance gives us confidence, both in the achievement of our full-year targets and in the smooth ongoing implementation of our five-year strategic plan. In addition, the Intelenet acquisition announced in June should enable us to achieve our 2022 targets ahead of time. From a strategy perspective, Intelenet brings to Teleperformance its high-end integrated solutions and extensive expertise in the area of digital transformation for businesses. The acquisition will provide an immediate and substantial boost to Teleperformance's offering. Backed by our very encouraging first-half results, we are raising our full-year 2018 guidance and are now targeting like-for-like revenue growth of more than + 7.5% and an EBITA margin before non-recurring items of above 13.5% at constant scope of consolidation. Thanks to solid cash flow generation, Teleperformance is well placed to rapidly reduce its net debt over the next two years." ----------------------------- FIRST-HALF AND SECOND-QUARTER 2018 REVENUE CONSOLIDATED REVENUE In the first half of 2018, consolidated revenue amounted to €2,070 million, representing a year-on-year increase of + 8.3% on a like-for-like basis. As reported, revenue was virtually stable (- 0.6%), reflecting a sharply negative €170 million currency effect that was mainly linked to the US dollar's decline against the euro and, to a lesser extent, the decrease in the Brazilian real and the Colombian and Argentine pesos. In the second quarter, consolidated revenue amounted to €1,044 million. On like-for-like basis, revenue increased by + 9.9%, representing a faster pace of growth than in the first quarter of the year. As reported, revenue growth came out at + 2.8%, due to the negative currency effect attributable primarily to the US dollar's weakness against the euro. However, since April 2018 the Group's revenue has begun to benefit from the recent rise in the US dollar against the euro. REVENUE BY ACTIVITY
Core Services revenue amounted to €1,754 million in the first half of 2018, a gain of + 8.7% on a like-for-like basis compared to the same year-ago period. Revenue remained stable on a reported basis (up + 0.1%), with the negative currency effect mainly attributable to the decline in the US dollar, Brazilian real and the Colombian and Argentine pesos against the euro. As in the first quarter, like-for-like growth in the first half was supported by very good performances in the Ibero-LATAM and Continental Europe & MEA regions. It also benefited, as expected, from a gradual recovery in the English-speaking market & Asia-Pacific (EWAP) region, where revenue returned to growth in the second quarter of the year.
Revenue in the English-speaking market & Asia-Pacific region amounted to €740 million in the first half of 2018, remaining virtually stable year-on-year on a like for like basis (up + 0.3%). On a reported basis, however, revenue was down 8.8% as a result of the US dollar's weakness against the euro. In the second quarter, revenue was up + 1.5% like-for-like and down 4.6% as reported, compared with the second quarter of 2017. Teleperformance continued to diversify its client portfolio in the region over the first half of the year. The most dynamic major client segments were e-retail, fast-moving consumer goods, the energy industry and utilities. Consumer electronics, the region's top revenue contributor, expanded at a satisfactory pace, and sustained growth was recorded in the automotive industry and food services, which are still relatively underrepresented in the Group's client portfolio. Despite the recent start-up of a major contract in the United States, telecommunications revenue remained lackluster, particularly in the Philippines (offshore services). In the second quarter, the region benefited from an improvement in revenue growth in the United Kingdom, particularly in the consumer electronics, administration, energy and local community services segments, despite the still uncertain economic environment. In Asia, the return to a solid pace of growth initiated in the first quarter of 2018 was confirmed over the first half, after a lukewarm performance in 2017. Development in the region continued to be driven by China and India, the most promising markets for outsourced business services. In light of the contracts signed recently and the projects already underway, the Group confirms the projection communicated at the beginning of the year of a return to stronger growth in the region starting in the second half.
Revenue from the Ibero-LATAM region amounted to €560 million in the first half of 2018. As in the first quarter, business continued to expand at a very healthy rate and to exceed budget forecasts. Growth came to + 17.1% on a like-for-like basis versus the same year-ago period, but was limited to + 4.7% as reported due to the negative currency effect related mainly to the weakening of the US dollar, the Brazilian real and the Colombian and Argentine pesos against the euro. In the second quarter, revenue was up + 20.4% like-for-like, confirming the very good performance posted in the first quarter. The region's main growth driver was Portugal, where the Group continued to benefit from the fast development of multilingual hubs serving major multinationals. In Spain, the renewed sales momentum observed at the beginning of the year continued during the second quarter, further attesting to the effectiveness of the previous two years' action plans and investments. The Group continues to benefit from the attractiveness of nearshore solutions in Mexico serving the US market, sometimes to the detriment of offshore solutions in the Philippines, and is expanding its presence in many different segments such as specialized retailing, food services, financial services and travel agencies. It is also benefiting from Mexico's buoyant domestic market and the investments made in the country in recent years. Growth in operations in Brazil and Argentina picked up pace during the period and performances remained satisfactory in Colombia. The rapid ramp-up of operations in the Peruvian market, which the Group entered in 2017, also contributed to strong first-half business growth in the region. To support this growth, new sites were opened during the first half, in Mexico and Portugal.
In the Continental Europe & MEA region, first-half 2018 revenue rose by + 14.5% like-for-like and by + 12.0% as reported, ending the period at €454 million. The negative currency effect stemmed mainly from the fall in the Egyptian pound, the Turkish lira and the Russian ruble against the euro. The gains recorded in the three months to March 31, 2018 continued in the second quarter, with revenue growth for the quarter coming out at + 15.4%. Business momentum remained strong in the region. The solid performance posted in the first half confirms the acceleration of revenue growth observed in second-half 2017 and reflects a very good sales dynamic among global clients and fast-growing local market leaders in a wide range of industries. Revenues generated by the Group's multilingual hubs in Greece and by operations in Egypt, Turkey and Eastern Europe (Russia, Poland and Romania) all rose sharply. Operations in France reported healthy sales performances starting in the second quarter, particularly in domestic business, with new contracts signed primarily in the energy and online services segments. Other growth drivers in the region included the resounding business recovery in Sweden and in Germany, with revenues reflecting the contribution of a new site in Kosovo serving the German market. The fastest growing client segments in the region remained consumer electronics, leisure and entertainment, travel agencies, transportation and fast-moving consumer goods. The main revenue contributors, such as consumer electronics and financial services, continued to grow at a solid pace. To support this growth, new sites were opened during the first half of 2018, in Russia and Poland.
Revenue from Specialized Services came in at €316 million in the first half of 2018. The business grew by + 5.7% like-for-like, but contracted by 4.1% as reported, due to the negative currency effect resulting mainly from the US dollar's significant fall against the euro during the period. LanguageLine Solutions' North American operations are a significant contributor to Specialized Services revenues. Revenue rose by + 6.3% in the second quarter, representing a faster pace of growth than in the first three months of the year. Held back by non-recurring items in the first quarter of the year, growth in LanguageLine Solutions revenue returned to normal in the second quarter. TLScontact continued to expand at a healthy pace in the first half of 2018, with growth slowing somewhat in the second quarter versus the first, despite a high basis of comparison for this period in 2017. Growth continued to be led by the satisfactory increase in visa application volumes on every government contract and by sales of add-on services during the visa issuance process. The LanguageLine Solutions and TLScontact businesses account for around 80% of Specialized Services revenues. FIRST-HALF 2018 RESULTS EBITA before non-recurring items came to €246 million for the first half of 2018, virtually unchanged from the prior-year period (€245 million). EBITA margin before non-recurring items widened further, to 11.9% from 11.8% in first-half 2017, despite the decline of the US dollar against the euro which, in view of the currency mix, negatively impacted Group margins. EARNINGS BY ACTIVITY EBITA BEFORE NON-RECURRING ITEMS BY ACTIVITY
In Core Services, EBITA before non-recurring items amounted to €152 million in the first half of 2018, compared to €147 million in first-half 2017. EBITA margin before non-recurring items stood at 8.7% versus 8.4% for the prior-year period. This improvement essentially reflects a positive mix effect resulting from bullish growth in the Ibero-LATAM region, which was the Group's most profitable region in the half-year period, and the ongoing margin recovery for Continental Europe & MEA.
The English-speaking market and Asia-Pacific region achieved EBITA before non-recurring items of €51 million in the first half of 2018, compared to €60 million in the prior-year period. EBITA margin before non-recurring items came to 6.8% versus 7.4% in first-half 2017. The decline stemmed mainly from the Group's offshore business in the Philippines, which remained subdued, particularly in the telecommunications segment, in favor of nearshore business in Mexico (Ibero-LATAM region). The uncertain economic environment in the United Kingdom also dampened profitability in the industry. Profitability progressed well in India and China, with the latter benefiting from the effective ramp-up during the period of recently opened sites. In light of recently signed contracts, projects already underway and the non-recurrence of the negative effects felt in 2017, which continued during the first half but should ease in the coming quarters, the Group is confident that margins in the region will improve in the second half of 2018 versus the prior-year period.
EBITA before non-recurring items in the Ibero-LATAM region amounted to €60 million in the first half of 2018, compared to €55 million in the same period in 2017. EBITA margin before non-recurring items remained high, at 10.8%, representing a significant increase over the first half of 2017 (10.3%). Growth in operations in Portugal and offshore Mexico was particularly robust and profitable during the period, while operating efficiency continued to improve steadily in Brazil, Argentina and Spain. The Group confirms its objective of a further improvement in margins across the region for the full year.
In the Continental Europe & MEA region, Teleperformance remained on the steady upward trend in profitability that began in 2012. EBITA before non-recurring items for the region came to €19 million, giving a margin of 4.2% versus 2.7% in the prior-year period. Positive factors contributing to this growth included:
The Group confirms its objective of improving the region's margins further for full-year 2018.
In Specialized Services, EBITA before non-recurring items amounted to €94 million in the first half of 2018, compared to €98 million in first-half 2017. EBITA margin before non-recurring items remained virtually stable at 29.6%, versus 29.7% in the prior-year period. The LanguageLine Solutions and TLScontact businesses, which account for around 80% of Specialized Services revenues, continued to post healthy margins in the first half of 2018. Specialized Services margins are expected to remain high over the full year and should include Intelenet's margins in the fourth quarter, after completion of the acquisition, which is scheduled to take place in September 2018. OTHER INCOME STATEMENT ITEMS Consolidated operating profit (EBIT) amounted to €190 million versus €191 million in first-half 2017. The currency effect had a negative impact of €16 million. First-half 2018 EBIT reflects the amortization of intangible assets in an amount of €41 million, a €12 million accounting expense on performance share plans and the €3 million impact of other non-recurring items, which correspond to costs related to the Intelenet acquisition announced on June 14. The financial result represented a net expense of €19 million, versus €25 million in 2017. Income tax expense amounted to €48 million, corresponding to an effective tax rate of 27.8%, versus 29.5% in the prior-year period. Net profit - Group share stood at €123 million for the period, up + 6.0% from the €116 million reported in first-half 2017. Diluted earnings per share came to €2.10, up + 6.1% year-on-year. CASH FLOWS AND FINANCIAL STRUCTURE Cash flow after interest paid and tax totaled €209 million versus €224 million in first-half 2017. The change in consolidated working capital requirement during the first half was an inflow of €28 million, versus €22 million in the prior-year period. This good performance reflects, in particular, the ongoing policy to improve the Group's liquidity. Net capital expenditure amounted to €81 million, or 3.9% of revenue, versus €68 million and 3.3% in first-half 2017. The Group continued to invest in its future development in terms of both business and margin growth while maintaining strict financial discipline. It continues to open new facilities and extend its existing facilities in order to support its clients in all of their markets (see the "Recent developments" section). In all, consolidated net free cash flow came to €156 million versus €178 million in the prior-year period. Financial investments included transactions with minority shareholders for €14 million, corresponding to the acquisition of non-controlling interests in a Specialized Services subsidiary. After taking into account €112 million in dividends, net debt stood at €1,308 million at June 30, 2018. The Group's financial structure therefore remains very solid, with equity of €1,958 million at June 30, 2018. RECENT DEVELOPMENTS
In the first half of 2018, Teleperformance continued to deploy its strategy of expanding worldwide by opening new facilities in:
The Group also increased the number of workstations at its existing facilities, in the English-speaking market & Asia-Pacific region (Canada and Indonesia), in the Ibero-LATAM region (Argentina, Brazil, Mexico, Peru, Portugal and Spain), and in Continental Europe & MEA (mainly Greece, Sweden, Egypt and Dubai). In all, more than 6,300 new workstations were created during the first half.
Teleperformance announced on June 14, 2018 that it had entered into a definitive agreement to acquire Intelenet, a major provider of high-end omnichannel customer experience management, back office, human resources, and financial and administration services. The company has more than 110 blue chip clients worldwide, mostly in the English-speaking market, India and the Middle East. Intelenet's growth momentum is strongly positive. For the fiscal year ended March 31, 2018, the company posted revenue of US$449 million, up + 10% year on year, and EBITDA of US$83 million, representing 18.5% of revenue versus 17.4% the previous year. The US$1.0 billion transaction will be fully financed through debt, including a €750 million bond issue carried out in late June. The acquisition is expected to close by September 30, 2018, subject to receipt of certain regulatory approvals and other customary closing conditions. OUTLOOK Teleperformance is raising its full-year 2018 like-for-like revenue growth objective from "more than + 6%" to "more than + 7.5%". The Group is also refining its target for EBITA margin before non-recurring items, which is now expected to be above 13.5% for the full year at constant scope of consolidation, and expects to continue generating robust cash flow. In addition, the Group confirms its revenue and profitability targets for 2022: revenue of more than €6 billion and EBITA before non-recurring items of more than €850 million. The Group nonetheless expects to update its long-term targets on completion of the Intelenet acquisition, scheduled to take place in September 2018. ------------------------------------------- DISCLAIMER All forward-looking statements are based on Teleperformance management's present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description of these factors and uncertainties, please refer to the "Risk Factors" section of our Registration Document, available at www.teleperformance.com. Teleperformance undertakes no obligation to publicly update or revise any of these forward-looking statements. RESULTS PRESENTATION AND DOCUMENTATION A conference call and webcast will be held today at 6:30 PM CEST The webcast will be available live or for delayed viewing at: http://teleperformance.webcast.ldvproduction.com/webcastlist.aspx?eid=155&lngid=en The half-year financial report and presentation materials will be available after the conference call on www.teleperformance.com at: https://www.teleperformance.com/en-us/investor-relations/press-releases-and-documentation/financial-results INVESTOR CALENDAR Third-quarter 2018: Monday, November 12, 2018 * The press release announcing the agreement was published on June 14, 2018 and is available from the Teleperformance website (www.teleperformance.com) ABOUT TELEPERFORMANCE Teleperformance (TEP - ISIN: FR0000051807 - Reuters: ROCH.PA - Bloomberg: TEP FP), the worldwide leader in outsourced omnichannel customer experience management, serves companies and administrations around the world, with customer care, technical support, customer acquisition (Core Services), as well as with online interpreting solutions, visa application management services, data analysis and debt collection programs (Specialized Services). In 2017, Teleperformance reported consolidated revenue of €4,180 million (US$4,720 million, based on €1 = $1.13). The Group operates 171,000 computerized workstations, with 223,000 employees across 350 contact centers in 76 countries and serving 160 markets. It manages programs in 265 languages and dialects on behalf of major international companies operating in a wide variety of industries. Teleperformance shares are traded on the Euronext Paris market, Compartment A, and are eligible for the deferred settlement service. They are included in the following indices: CAC Large 60, CAC Next 20, CAC Support Services, STOXX 600, SBF 120, S&P Europe 350 and MSCI Global Standard. They also have been included in the Euronext Vigeo Eurozone 120 index since December 2015, with regard to the Group's performance in corporate responsibility. For more information: www.teleperformance.com Follow us: Twitter @teleperformance APPENDIX CONSOLIDATED INCOME STATEMENT € millions
CONSOLIDATED CASH FLOW STATEMENT € millions
CONSOLIDATED BALANCE SHEET € millions
ALTERNATIVE PERFORMANCE MEASURES Change in like-for-like revenue: Change in revenue at constant exchange rates and scope of consolidation, corresponding to current year revenue - last year revenue at current year rates - revenue from acquisitions at current year rates / last year revenue at current year rates.
EBITDA before non-recurring items or current EBITDA (Earnings before Interest, Taxes, Depreciation and Amortizations): Operating profit before depreciation & amortization, amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items.
EBITA before non-recurring items or current EBITA (Earnings before Interest, Taxes and Amortizations): Operating profit before amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items.
Non-recurring items: Principally comprises restructuring costs, incentive share award plan expense, costs of closure of subsidiary companies, transaction costs for the acquisition of companies, and all other expenses that are unusual by reason of their nature or amount. Net free cash flow: Cash flow generated by the business - acquisitions of intangible assets and property, plant and equipment net of disposals - financial income/expenses.
Net debt: Current and non-current financial liabilities - cash and cash equivalents
Diluted earnings per share: Net profit attributable to shareholders divided by the number of diluted shares and adjusted Diluted earnings per share is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding by the effects of all potentially diluting ordinary shares. These include convertible bonds, stock options and incentive share awards granted to employees when the required performance conditions have been met at the end of the financial year. ------------------------------------------
N.B.: The half-year financial
statements at June 30, 2017 and June 30, 2018 have been subject to
review by the auditors.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180726005618/en/ |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
