Publicis Groupe Returns to Growth in Second Quarter

The Tip Desk · December 31, 2016 · 2 min read

The advertising group reported a return to organic growth in the second quarter as it implements a cost-reduction reorganization.

Publicis Groupe, the advertising group, reported consolidated revenue of 4,843 million euros for the first half of 2017, compared to 4,753 million euros in the same period in 2016. The company said it returned to growth in the second quarter, with consolidated revenue reaching 2,515 million euros compared to 2,462 million euros in 2016.

Organic growth for the second quarter was 0.8%, a slight acceleration from the -1.2% recorded in the first quarter. The company attributed this move to a better performance in North America and a reduced impact from past difficulties, though it noted that weakness in the fast moving consumer goods sector continued to penalize growth. The group also cited the contribution of budgets won since the second quarter of 2016, including accounts from Walmart, HPE, USAA, Asda, Motorola and Lowe’s.

Regional performance in the second quarter showed varied results. Europe reported organic growth of 3.2%, while North America grew 0.2%. Latin America grew 2.8% organically, and the Middle East and Africa grew 0.2%. Asia Pacific saw an organic decline of 3.3%.

Operating margin for the first half rose 3.1% to 638 million euros. The operating margin rate was 13.2%, an improvement of 20 basis points over 2016. The company said it is focusing on the solidity of its operating margin and cash-flow generation through a reorganization announced in December 2015. This plan aims to create a more efficient cost structure by eliminating redundancies through productivity efforts, simplification of structures, and the regionalization of Shared Service Centers.

Net income attributable to the group was 387 million euros for the first half, up from 381 million euros in 2016. Diluted current net income per share rose 4.4% to 1.89 euro.

Net financial debt rose to 2,092 million euros as of June 30, 2017, from 1,244 million euros on December 31, 2016. This move shifted the net debt to equity ratio from 0.21 to 0.37. The company reported that consolidated equity attributable to the group decreased from 6,055 million euros at the end of 2016 to 5,618 million euros by June 30, 2017. This decline was driven by 170 million euros in cash dividends and 296 million euros in share buybacks.

Net cash flows from operating activities resulted in a need of 382 million euros in the first half of 2017, compared to a need of 466 million euros in the first half of 2016.

The company said its priority is the improvement of organic growth and its ambition is to achieve growth rates higher than those of its competitors by becoming the leader of operational and marketing transformation.