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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Teleperformance    TEP   FR0000051807

TELEPERFORMANCE

(TEP)
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Teleperformance : 2018 Annual Results – February 28, 2019

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02/28/2019 | 12:01pm EDT

PRESS RELEASE

2018 Annual Results

  • + 9.0% like-for-like* growth in revenue

  • 13.6% EBITA margin before non-recurring items, up + 30 bps on 2017

  • 2019 financial objectives: like-for-like revenue growth of at least + 7%* and an increase in EBITA margin before non-recurring items of + 20 bps

  • 2022 financial objectives confirmed excluding acquisitions: at least 6 billion in revenue and an EBITA before non-recurring items of at least €850 million

Paris - February 28, 2019 - The Board of Directors of Teleperformance, the worldwide leader in outsourced omnichannel customer experience management, met today and reviewed the consolidated and parent company financial statements for the year ended December 31, 2018. The Group also announced its financial results for the year.

2018: another record year

Sustained growth in revenue and margins Faster revenue growth in the fourth quarter

2018 operating highlights

  • Launch of Teleperformance Digital Integrated Business Services (Teleperformance D.I.B.S.) following the acquisition of Intelenet

  • Growth in worldwide operations with the addition of 18,000 new workstations

  • Roll-out of Teleperformance's new brand identity

2019 financial objectives: continued profitable growth

  • Like-for-like revenue growth of at least + 7%

  • EBITA margin before non-recurring items up + 20 bps

Long-term financial objectives excluding acquisitions confirmed

  • Revenue of at least 6 billion in 2022 at constant scope of consolidation

  • EBITA before non-recurring items of at least €850 million in 2022 at constant scope of consolidation

  • Pursuit of targeted acquisitions, with objectives to be upgraded on completion of any such transaction

Revenue:

€4,441 million

up + 9.0% like-for-like*, up + 6.2% as reported

up + 10.8% like-for-like* in fourth-quarter 2018

EBITDA before non-recurring items:

€762 million, up + 6.0% vs. 2017, for a margin of 17.2%

EBITA before non-recurring items:

€603 million, up + 8.6% vs. 2017, for a margin of 13.6%

Diluted earnings per share:

€5.29

Dividend per share:

€1.90**

* At constant exchange rates and scope of consolidation ** Subject to shareholder approval at the next Annual General Meeting, to be held on May 9, 2019

---------------------------------------------------------------------------------------------------------------------------------------

N.B.: - The consolidated financial statements have been audited and certified

- The Alternative Performance Measures (APMs) are defined in the Appendix

Teleperformance SE (Societas Europaea). Share capital of €144,450,000. 301 292 702 RCS Paris. 21-25 rue Balzac, 75406 Paris Cedex 08 France. Siret 301 292 702 00059. Code APE 6420Z.

1/18

2018 FINANCIAL HIGHLIGHTS

€ millions

2018

2017

% change

€1=US$1.18

€1=US$1.13

Revenue

4,441

4,180

+ 6.2%

Like-for-like growth

+ 9.0%

EBITDA before non-recurring items

762

720

+ 6.0%

% of revenue

17.2%

17.2%

EBITA before non-recurring items

603

556

+ 8.6%

% of revenue

13.6%

13.3%

EBIT

Net profit - Group share

Diluted earnings per share (€)

Dividend per share (€)

Net free cash flow**

485

355

+ 36.4%

- 0.2%

312 5.29

3125.31

- 0.4%

1.90*

282

1.85324

- 13.3%

* Subject to shareholder approval at the next Annual General Meeting, to be held on May 9, 2019 ** After recognition of €25 million in non-recurring expenses in 2018

Commenting on this performance, Teleperformance Chairman and Chief Executive Officer Daniel Julien said: "In 2018,

Teleperformance generated strong like-for-like growth of + 9%, well above the market average, and also achieved an improvement in its EBITA margin. Once again, we've strengthened our position as worldwide leader in outsourced customer experience management.

Thanks to the October 2018 acquisition of India-based outsourcing company Intelenet, which employs 58,000 people and specializes in integrating digital solutions into client processes, we have significantly enhanced our services offering, particularly in banking, hospitality, transportation and healthcare.

Today, the services offered by Teleperformance are classified into three categories:

  • - Core Services, which cover customer care, technical support and customer acquisition.

  • - Digital Integrated Business Services (D.I.B.S), which cover the end-to-end outsourcing of client processes.

  • - High-value Specialized Services, which include online interpreting, visa application management and services related to debt collection.

Together, our enhanced organization and expanded skills base are enabling us to effectively meet our clients' needs in terms of their development and digital transformation.

Since end-2012, Teleperformance has recorded like-for-like growth of more than + 5% for 27 straight quarters, as well as an improvement in EBITA margin every year. This performance has earned us our status as a growth stock and we fully intend to continue in this direction.

Our targets for 2019 are like-for-like revenue growth of at least + 7% and an improvement in EBITA margin before non-recurring items of 20 basis points.

Looking further ahead, we have confirmed our 2022 targets, at constant scope of consolidation, to revenue of at least €6 billion and EBITA before non-recurring items of at least €850 million. We will also continue to implement our carefully controlled strategy of selective acquisitions, while maintaining our commitment to financial discipline. The successful implementation of this strategy should enable us to raise these targets at a later date."

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N.B.: - The consolidated financial statements have been audited and certified

2/18

- The Alternative Performance Measures (APMs) are defined in the Appendix

Teleperformance SE (Societas Europaea). Share capital of €144,450,000. 301 292 702 RCS Paris. 21-25 rue Balzac, 75406 Paris Cedex 08 France. Siret 301 292 702 00059. Code APE 6420Z.

CONSOLIDATED REVENUE

Revenue amounted to €4,441 million in the year ended December 31, 2018, representing a year-on-year increase of + 9.0% at constant exchange rates and scope of consolidation (like-for-like) and of + 6.2% as reported. The gap between the reported and the like-for-like figures was attributable to the €203 million negative currency effect stemming from the decline in the US dollar, Brazilian real and Argentine peso against the euro, mainly in the first half of the year.

Fourth-quarter 2018 revenue stood at €1,295 million, an increase of + 10.8% on a like-for-like basis compared with the year-earlier period, with growth gaining momentum on the previous quarters. The reported increase came to + 19.4%. Highlights of the quarter included faster like-for-like growth in Core Services and the consolidation of Intelenet as from October 1, 2018.

REVENUE BY ACTIVITY

2018

€ millions

CORE SERVICES

3,697

84%

3,542

English World & Asia-Pacific (EWAP)

1,586

36%

1,607

Ibero-LATAM

1,149

26%

1,084

Continental Europe & MEA (CEMEA)

962

22%

851

SPECIALIZED SERVICES

639

14%

638

INTELENET

105

2%

-

TOTAL

4,441

100%

% total 2017

% total

Reported

Like-for-like

85%

+4.4%

+9.8%

39%

-1.3%

+2.8%

26%

+6.0%

+16.0%

20%

+13.0%

+15.4%

15%

+0.0%

+4.3%

-

-

+ 6.2%

+9.0%

4,180

% change

100%

  • Core Services

Core Services revenue amounted to €3,697 million in 2018, a year-on-year increase of + 9.8% like-for-like and + 4.4% as reported, primarily due to the decline in the US dollar against the euro.

The like-for-like gain was lifted by the sustained solid performance in the Ibero-LATAM and Continental Europe & MEA (CEMEA) regions and by the steady upturn in growth throughout the year in the English World & Asia-Pacific (EWAP) region

Compared with the first three quarters, like-for-like growth accelerated in the final three months, to + 12.1% year-on-year.

  • o English World & Asia-Pacific (EWAP)

Revenue in the EWAP region came to €1,586 million for the year, up + 2.8% compared with 2017 like-for-like and + 1.3% as reported, primarily due to the negative currency effect related to the decline in the US dollar against the euro.

---------------------------------------------------------------------------------------------------------------------------------------

N.B.: - The consolidated financial statements have been audited and certified

3/18

- The Alternative Performance Measures (APMs) are defined in the Appendix

Teleperformance SE (Societas Europaea). Share capital of €144,450,000. 301 292 702 RCS Paris. 21-25 rue Balzac, 75406 Paris Cedex 08 France. Siret 301 292 702 00059. Code APE 6420Z.

Fourth quarter revenue rose by + 7.0% like-for-like versus the prior-year period. As expected, the quickening pace of growth over the year was primarily led by the turnaround in the North American operations.

In North America, Teleperformance continued to diversify its client portfolio. Among the leading client segments in the region, the fastest growing are consumer electronics, e-tailing, fast-moving consumer goods and transportation services, with demand from the entertainment, online education and automotive industries continuing to ramp up rapidly.

As expected, the UK outsourced customer experience management market continued to be impacted by the uncertainty caused by Brexit.

After a disappointing year in 2017, growth was robust in Asia in 2018, led by successful contract wins in the consumer electronics, e-tailing and financial services segments. Development in the region continued to be driven by China and India, the most promising markets for outsourced business services. In addition, the Malaysian unit fully benefited from the ramp-up of its multilingual facility in Penang, which provides large accounts in the internet services industry.

  • o Ibero-LATAM

Business continued to expand at a very healthy pace over the year, delivering revenue of €1,149 million for

2018. This represented an increase of + 16.0% like-for-like and of + 6.0% as reported, primarily due to the decline in the US dollar, the Brazilian real and the Colombian and Argentine pesos against the euro.

In the fourth quarter, revenue rose by + 15.2% like-for-like, sustaining the very robust momentum built up over the preceding quarters.

One of the region's primary growth drivers during the year was Portugal, where the Group's business was lifted by the rapid expansion of multilingual hubs serving fast growing multinationals in such industries as e-tailing, entertainment and fast-moving consumer goods. In Spain, business growth was strong in 2018 in a wide variety of segments, such as information technologies and consumer goods.

The Group is continuing to leverage the appeal of nearshore, pan-American solutions in Mexico and Colombia, where it is growing its business in a wide range of industries, including healthcare and financial services in Mexico, and airlines and telecoms in Columbia. It is also tapping into buoyant domestic markets in both countries.

Business in Brazil remained robust, in an economic and geopolitical environment that seems to be stabilizing. Growth was still subdued in 2018, however, despite a good performance in the entertainment and consumer goods segments.

The rapid ramp-up of operations in the Peruvian market, which the Group entered in 2017, also contributed to strong business growth in the region.

To support this growth, Teleperformance continued to expand its existing locations and open major new facilities, especially in Colombia, Mexico and Portugal (see the 2018 operating highlights below).

  • o Continental Europe & MEA (CEMEA)

In the CEMEA region, revenue rose by + 15.4% like-for-like to €962 million in 2018, or by + 13.0% as reported.

The sustained growth recorded in the first nine months of the year gained new momentum in the fourth quarter, with a + 17.9% like-for-like increase versus the same period last year.

---------------------------------------------------------------------------------------------------------------------------------------

N.B.: - The consolidated financial statements have been audited and certified

4/18

- The Alternative Performance Measures (APMs) are defined in the Appendix

Teleperformance SE (Societas Europaea). Share capital of €144,450,000. 301 292 702 RCS Paris. 21-25 rue Balzac, 75406 Paris Cedex 08 France. Siret 301 292 702 00059. Code APE 6420Z.

The factors driving this growth performance remain unchanged, led by a very good sales dynamic with multinational clients and fast-growing local market leaders in a wide range of industries.

The fastest growing regional segments are still e-tailing, leisure and entertainment, travel agencies, transportation services and fast-moving consumer goods. The main revenue contributors, such as consumer electronics and financial services, continued to grow at a satisfactory pace.

Revenue generated by the multilingual hubs in Greece and the operations in Egypt, Turkey and Eastern Europe (Russia, Poland and Romania) rose significantly over the year.

Business growth in France picked up speed throughout the year on the ramp-up of contracts signed primarily in energy and utilities, financial services, transportation services and e-tailing.

Regional revenue was also lifted by faster growth in business in Sweden and Italy.

  • Specialized Services

Revenue from Specialized Services totaled €639 million in 2018, a like-for-like gain of + 4.3% compared with

2017. On a reported basis, growth was stable for the year. The currency effect primarily stemmed from the US dollar's decline against the euro, particularly during the first six months, and mainly concerned the LanguageLine Solutions business.

In the fourth quarter, revenue rose by + 3.0% like-for-like and + 5.3% as reported compared with the prior-year period.

LanguageLine Solutions' online interpreting services and TLScontact's visa application management business enjoyed satisfactory growth throughout the year, despite the negative impact of the following non-recurring items:

  • - At LanguageLine Solutions, (i) a technical incident in the first quarter that was quickly resolved but which had a negative impact on billed service volumes; and (ii) an unfavorable basis of comparison in the fourth quarter, due to the surge in new demand for interpreting services following the hurricanes in the United States in 2017, whose revenue impact was not recorded until the final quarter.

  • - At TLScontact, a change in the third quarter in the method for invoicing the volumes processed on behalf of UK Visas and Immigration, which had a negative impact on revenue growth. The method was changed during the renewal in 2018 of the contract first signed in 2013.

Revenue from ARM's debt collection services in North America was stable overall for the year.

The growth dynamic in the LanguageLine Solutions and TLScontact businesses, which together account for around 80% of Specialized Services revenue, remains very positive, which should feed through to more robust gains in 2019.

  • Intelenet

Intelenet, which has been consolidated since October 1, 2018, contributed €105 million to fourth quarter revenue (see the 2018 operating highlights below).

---------------------------------------------------------------------------------------------------------------------------------------

N.B.: - The consolidated financial statements have been audited and certified

5/18

- The Alternative Performance Measures (APMs) are defined in the Appendix

Teleperformance SE (Societas Europaea). Share capital of €144,450,000. 301 292 702 RCS Paris. 21-25 rue Balzac, 75406 Paris Cedex 08 France. Siret 301 292 702 00059. Code APE 6420Z.

Disclaimer

Teleperformance SE published this content on 28 February 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 28 February 2019 17:00:04 UTC

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Financials (EUR)
Sales 2019 5 250 M
EBIT 2019 731 M
Net income 2019 377 M
Debt 2019 2 101 M
Yield 2019 1,16%
P/E ratio 2019 29,6x
P/E ratio 2020 25,7x
EV / Sales2019 2,50x
EV / Sales2020 2,27x
Capitalization 11 041 M
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Number of Analysts 14
Average target price 192,07  €
Last Close Price 188,50  €
Spread / Highest target 16,7%
Spread / Average Target 1,89%
Spread / Lowest Target -39,0%
EPS Revisions
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NameTitle
Daniel Ernest Henri Julien Chairman & Chief Executive Officer
Jeff Balagna Operation Director
Olivier Claude Jean Rigaudy Chief Financial Officer & Deputy CEO
Joao Cardoso Head-Research, Development & Digital Integration
Philippe Dominati Director
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