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Publicis continues to change and promises to return to growth

2020-02-06T08:25:38.675Z


On a like-for-like basis, the income of the world number three in advertising fell by 2.3% in 2019. The cost of its transformation justifies the French group.


"Results perfectly in line with our forecasts," asserted this Thursday morning Arthur Sadoun, the chairman of the management board of Publicis, which presented before the market its annual results for 2019. In other words: move on, there is nothing abnormal. Last year, the French group nevertheless recorded a net income of 9.8 billion euros, down 2.1% at constant scope and exchange rates due in particular to a last quarter clearly in the red ( -4.5%). Negative organic growth therefore, which had not happened since the black hole of 2009 after the financial crisis (-6.5% in 2009), and which is established in the continuity of a movement, observable for five years : that of a growth failure. Publicis expected these performances. He had predicted it in October.

“We have the strongest financial ratios in the market. It is the transformation of our activities that has an impact on our organic growth, ” says Arthur Sadoun. With a profitability of more than 10%, a net profit of almost 1.2 billion euros and above all a growing margin, Publicis, which opens the ball of the annual publications of the global communication giants, underlines that its transformation is " finalized in terms of assets and structures ” and that it will focus this year “ on executing the strategy and restoring organic growth ” .

The French group ensures that the signals are there, attesting to this famous transformation in progress, even if it has not yet resulted in sustainable and solid growth. It wants to expand its scope, from the simple provision of communication services to supporting the digital transformation of its customers. A partial change of profession which justified the acquisition in 2014 of Sapient Publicis for 3 billion euros, then that last year of the American specialist in CRM Epsilon for 4 billion euros.

In support of its demonstration, Publicis notably lists that it was ranked number one in 2019 in “new business” (net gain from new budgets) by JP Morgan, with $ 2.2 billion net of contracts, among which Disney, Nivea, LVMH or Bank of America, all new customers, as well as significant extensions of contracts with Pfizer or Mondelez.

Based on published data, that is to say taking into account the acquisition of Epsilon, net sales (after withdrawal of re-billable costs) increased by 9.3%, resulting in an “evolution of our mix of income ” , underlines Arthur Sadoun. "30% of our turnover comes from data and techno and in the United States, our first market, this share now reaches 50%" .

Competitive strengths

On the American market, which accounts for 55% of its total revenue, Publicis still faces a decline in its traditional revenues in traditional advertising (especially TV advertising) due to cuts and budget transfers to digital from major advertisers, especially in consumer products or services. "But the good news is that this market is the one that is changing the fastest and on which we have major competitive advantages , " argues Arthur Sadoun, who mentions the budgets Disney or Bank of America, won, according to the boss, thanks to "Publicis' recognized ability to develop large-scale personalized experiences for consumers" . Competitive advantages that would have hit home with advertisers deemed difficult.

In France, a pilot country for the new organization, the establishment of key account managers who rely agnostically on all of the resources of the different agencies has made it possible to maintain the level of income, which is very slight drop.

For 2020, Publicis considers that it is "well positioned" and promises that "a sequential improvement will be perceived quickly" , even if the group expects a negative first half, particularly during the first three months of the year. In short, the coming quarters will have to demonstrate that the transformation is positive in the long term and does not destroy value.

Thursday morning, the Paris Bourse reacted well. Publicis shares gained more than 4% at the start of the session, on a market up by almost 1%.

Source: lefigaro

All life articles on 2020-02-06

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