Publicis Groupe’s strong Q1 absorbs $94.9m loss from Russia exodus
Publicis Groupe shrugged off concerns about the impacts of Covid-19, rising inflation and the war in Ukraine in its 2022 first-quarter results, with organic growth rising “well above expectations.”
Publicis Groupe also revealed a $94.9m loss related to its exit from Russia / The Drum
The French holding company, which owns agencies such as BBH, Starcom and Leo Burnett, reported commercial momentum in the US and organic growth in every region. It has confirmed it expects to grow 5% by the end of the financial year.
Publicis boss Arthur Sadoun said in a statement: “We are confident in our ability to deliver on all of the objectives we set for the year and actually come in at the upper end of our organic growth target, despite the uncertainty caused by the global health situation, the evolution of the conflict in Ukraine, and the consequences of inflation for our clients.”
The company also revealed that its exit from Russia had cost it over €87m ($94.9m).
What do the results show?
Net revenue increased 17.1% in the first quarter, with organic growth across the group at 10.5%. Total net revenue for the quarter was €2.8bn ($2.97bn).
Publicis’s home markets in Europe performed strongly, with organic growth of 14.9%, while net revenues in North America increased 16.1%.
Publicis Sapient was highlighted as driving growth in the US (16.3%), the UK, Thailand and the Middle East and Africa. Epsilon also grew 6.3% organically in the US.
Sadoun commented: “Our model is going from strength to strength, as it continues to capture rising client demand for first-party data, digital media and commerce. This is particularly true in business transformation, where Publicis Sapient saw strong acceleration this quarter and grew +18% globally.
“All of our regions performed well. The organic growth of the US at +8% confirms the country’s continued dynamic, with a good performance of Epsilon at its core. Europe posted robust recovery at +15% organic growth, fueled by France and the UK. Meanwhile, in Asia, we also delivered very solid numbers, with +14% organically and double-digit growth once again in China.“
During the first quarter, Publicis agencies across the world picked up accounts for Heineken, Churchill Insurance, Barclaycard, Toyota, Walmart and McDonald’s.
What’s the outlook for the rest of the year?
The company’s results statement noted that under normal circumstances, a strong Q1 would have resulted in upgraded shareholder guidance, but due to the economic threats of the war in Ukraine, inflation and potential Covid disruption, it had decided only to confirm its previous guidance. That includes a prediction of 5% annual organic growth, a 17.5% operating margin and a ”very solid” second quarter.
In the last three months, Publicis Groupe acquired Romanian software company Tremend and exited Russia. The departure from that market caused a one-off loss of €87m ($94.9), the results statement said.
Control of Publicis’s former agencies in the country was handed over to founding chairman Sergey Koptev, who has been charged with ensuring job security for the 1,200 Publicis staff employed in Russia.
Sadoun added: ”I would like to thank our teams for their incredible efforts, and our clients for their partnership.
”Of course, the start to the year has also been dominated by the war in Ukraine. Our thoughts and unwavering solidarity go out to the Ukrainian people, and our 350 employees in the country. We will continue to respond to the gravity of this situation with concrete actions, and a clear focus on protecting their safety and wellbeing.”
It comes after Publicis Groupe boss Arthur Sadoun recently went public with his cancer recovery in a reassuring video addressed to employees and stakeholders.