Publicis improves in Q3 although CEO Sadoun warns of difficult fourth quarter as lockdowns loom

The good news for Publicis Groupe is that it cut it losses in the third quarter of 2020, losses in terms of organic growth which is the only measure of ad holding companies analysts and investors tend look at.

Organic growth improved from -13% in Q2 (one of the weaker performances among the top six) to -5.6%, aheqd of analysts’ forecasts. In the US, where the French-owned company now does 60% of its business, the number was (just) -2.4%, proof it you like that Trumponomics pays off for some companies.

The bad news is that Europe is still a car crash – organic growth down 9% – and may well become worse as partial or even complete lockdowns are introduced to combat a second wave of the pandemic.

CEO Arthur Sadoun (above) who can be rightly pleased with these numbers, struck a cautious note saying: “We believe that these relatively solid business trends should continue until year-end. However, with the current resurgence of the pandemic and the restrictions imposed, we have to be cautious about Q4, which might be impacted further and come below Q3.”

As ever with Arthur there was a bullish note too: “When it comes to our organization, we have built three structural advantages with our global delivery centres, our country model, and Marcel, which enable us to adapt and continue to deliver strong financial performance. We are therefore confident in delivering our (€500m) cost reduction plan, and as a result an operating margin rate slightly ahead of current analyst consensus of 14.3% for 2020.”

Publicis has always been strong on margins against the rest of the field. “Global delivery centres” presumably means the much-hyped ‘Power of One’ (especially via data-based business Publicis.Sapient and $4.4bn Epsilon, Sadoun’s biggest bet) while the much-derided Marcel internal communications app has presumably proved useful in lockdown.

But Publicis still makes money – net revenue in Q3 was €2.3bn only down a bit on 2019 – and Sadoun has done a good job of communicating with the troops (whose numbers are doubtless depleted) while the country managers get on with the heavy lifting of redundancies and cost cutting.

Publicis has also won a lot of new business in 2020, most recently energy giant E.ON’s media business in Europe.

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