Publicis reports Q1 early: revenues rise but organic growth hit by FMCG ad cuts

Publicis reveals rise in net revenues

Publicis Group has reported a rise in revenue alongside a decline in organic growth, but boss Arthur Sadoun assured it was “in line with expectations” and the outlook for the year was positive.

The company released its first-quarter earnings three days ahead of schedule as it announced the $4.5bn acquisition of Epsilon on Sunday (14 April) – the largest ever for the French holding company.

It said net revenue increased 1.7% from a year earlier to €2.12 billion but organic growth was down 1.8% due to “a handful of FMCG clients” in North America cutting their ad spend.

“The retention of our clients also recorded a marked improvement,” said Sadoun.

“This is helping us to mitigate attrition that mainly comes from FMCG clients and that has remained high in the quarter […] However, we believe that the pace of attrition will slow down in the second half of 2019.”

According to a report from consultancy R3 into f 7,000 agency new business wins last year, Publicis landed a total of $736.4m in revenue after winning accounts from Mercedes-Benz, Marriott International, Ford, GlaxoSmithKline, and Dunkin Doughnuts.

But North America revenues for the group were down 0.3%, while Latin America dropped 8.3%. Europe, APAC and the Middle East and Africa saw growth of 3.1%, 4% and 32.7% respectively.

Sadoun said the outlook for the year ahead was positive, assuring investors after a year of continued decline in its share price. Its disappointing fourth-quarter earnings capped off a year in which share price dropped 15%.

Much of the promise for the year ahead came from the landmark acquisition of Epsilon. Speaking to The Drum as the deal was confirmed, Sadoun said it was a “creativity play” that would help every fraction of the business better “fuse” technology and creative.

Epsilon generated revenue of $1.9bn last year, almost entirely in the United States.

Publicis shares were up 4.2% in early trading of Monday.

“This acquisition will accelerate the implementation of our strategy to become our clients’ preferred partner in their transformation. Realized at compelling financial terms, the transaction will make us fully equipped with truly end-to-end suite solutions to address the increasingly complex needs of our clients in a fast-changing, data-driven marketing environment,” said Sadoun in the earnings update.

“The Publicis Groupe will be stronger, with a balanced revenue mix across diversified expertise. We will be in a position to grasp a larger share of the marketing and business transformation market, which will significantly expand our growth opportunities”.

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