Publicis Groupe chairman and CEO Maurice Levy made his last earnings call Today (he’s stepping down to be replaced by Arthur Sadoun, both below) and, as ever, produced a bravura performance despite some verging-on-grim numbers.
Q1 revenue was €2.33bn with reported growth of 1.6 per cent but -0.6 per cent in constant currencies and organic “growth” of -1.2 per cent. So Publicis is in reverse although the numbers could have been much worse but for a string of new business wins following a gruesome 2015, especially in the US. In Q1 both France and the UK performed strongly with account wins including Asda for the UK’s Saatchi & Saatchi.
In 2016 as a whole Publicis posted a net loss of €527m.
Levy said “Our first quarter figures send out faint but encouraging signals as to the Groupe’s situation. Although organic growth is slightly negative at -1.2per cent, this is an improvement on the fourth quarter of 2016.
“We expect Q2 to remain in negative territory, but to show an improvement compared with the first quarter.
“To measure performance adequately, organic growth needs to be put into perspective alongside the impact of past difficulties. Contribution of account wins to Q1 revenue illustrates a positive momentum.
“This momentum is encouraging in many respects: the implementation of The Power of One is generating positive feedback from clients; over 60 GCLs and CCLs (Groupe Client Leaders and Country Client Leaders) have been appointed; Razorfish has been combined with SapientNitro to form SapientRazorfish, a merger that is well under way with new teams appointed and simplification progressing. As a result, notable progress has been made in terms of new business.”
He probably didn’t mean “faint” (he is French, after all) but this is putting a brave face on things in whatever language.
The Groupe does seem to have recovered its new business brio, particularly in media, and Publicis Media boss Steve King has been elevated to the management board, somewhat belatedly. But new business comes at a discount these days, particularly in media, with clients driving ever-harder bargains. The Groupe’s digital business still looks a mess with expensive acquisitions being lumped into $3.7bn buy Sapient.
Levy is staying on as chairman of the Supervisory Board, which represents shareholders led by Elizabeth Badinter of the founding family. How this plays with Sadoun and other senior managers remains to be seen.
The jury is also still out on Levy’s “Power of One” restructuring. Is this really a more client-friendly structure, as portrayed, or a cover for the Groupe to cut costs in a low growth, tough client environment?