Is Publicis Groupe on the (long and painful) way back or still mired in problems mainly of its own making, in particular over-paying for consultancy Sapient, which it bought for $3.2bn?
Sapient, now Publicis.Sapient, is key to new CEO Arthur Sadoun’s hoped-for “transformation,” making Publicis more like Accenture we might say, but the price is affecting its ability to pay dividends and achieve margin targets. Sadoun has declined to endorse former boss Maurice Levy’s hoped-for 17 per cent target.
In Q3 2017 Publicis reported organic sales growth of 1.2 per cent (against Q2’s 0.8 per cent), missing analysts’ targets. The US, its biggest market did best with three per cent, Europe fell 1.5 per cent, Latin America was up two per cent and Asia Pacific down 3.1 per cent. Its UK businesses (the group’s agencies include BBH, Leo Burnett, Saatchi & Saatchi, Starcom and Zenith) grew by about six per cent in the first half.
Such a radical transformation – Sadoun’s “power of one” or POO as we like to call it – takes more than three months to effect so quarterly reporting isn’t doing Publicis any favours. Sadoun (below) says: “We know we are only in the middle of our transformation journey. What we are doing is difficult, the environment is challenging, but we believe it will result in a sustained organic growth path at Publicis.”
Publicis is to hold an investor day in March next year by which time, presumably, the transformation should be complete.
In the meantime, with its shares languishing and valued at €13.4bn, the company may be a tempting target for a consultancy or a private equity buyer who may seek to break it up. A defensive merger with consultancy Capgemini, with whom it works on McDonald’s, may be on the cards. Such a deal, though, would probably flush out other buyers.