Gurjit Degun
Jul 24, 2020

Publicis Groupe shares jump as Q2 results better than feared

Arthur Sadoun, chairman and chief executive, said that the business has 'strong fundamentals to weather the crisis'.

Sadoun: business has a 'very solid financial backbone'
Sadoun: business has a 'very solid financial backbone'

Publicis Groupe’s global organic revenue dropped 13% year on year over the second quarter of the year, as the impact of the coronavirus outbreak on the business was not as bad as it first feared. 

Net revenue for the group grew 2.6% to €2.3 billion (US$2.67 billion).

The company was boosted by its performance in North America, where net revenue grew 23.9% to €1.5 billion ($1.74 billion), with organic growth down 7.6%.

As a result the company's share price shot up to €30.10 ($34.9) when the stock market opened Thursday morning in Europe, having closed at €26.94 ($31.3) the previous night—an 11.7% rise. 

For the six months to 30 June, global net revenue was up 9.7% to €4.8 billion ($5.57 billion) and up organically by 8%. 

North America was the only region to grow, with revenue up a marked 30% to €3 billion ($3.48 billion).

Asia Pacific represented the smallest decline of the remaining regions, with net revenue down by 2.3% to €434 million ($503 million). China and Australia both saw declines in organic growth, down by 10.2% and 5.4% respectively, while India and Singapore grew by 3.6% and 1.5%.

Latin America had the biggest slump, with revenue down by -27.8% to €104 million ($121 million), followed by Europe, which declined by 16% to €1 million ($1.16 million), and the Middle East and Africa region, down by 11.2% to €135 million ($167 million).

Publicis said this was "significantly better" than the -23% decline in global ad spend predicted by Zenith and the 30% by the World Federation of Advertisers for Q2.

Publicis Groupe said the health division was the only area that recorded double-digit growth and that Europe was particularly affected because lockdown measures lasted for the vast majority of the second quarter.

Arthur Sadoun, chairman and chief executive of Publicis Groupe, said that the results show that the business has "strong fundamentals to weather the crisis".

He added that the business, which owns agencies including Saatchi & Saatchi, Leo Burnett, Zenith and Starcom, has "a very solid financial backbone and a strong liquidity position that will get us through these uncertain times".

Sadoun explained that Publicis Groupe’s business model of combining creative, media, data and technology has helped it to reduce the impact of Covid-19. 

He also pointed to new-business wins around the world such as Sephora in the US and McDonald’s in China.

"There is no doubt that we will all have to live with the virus and its economic and social consequences for a while, but Publicis is well armed to weather this crisis," Sadoun said.

"First, we have the products and services that our clients need. Over the last few weeks, we have seen an increased demand for all the capabilities that drove our strategy in the last few years: first-party data, breakthrough creativity, digital-first media and technology.

"The crisis has clearly accelerated the relevance of our go-to-market. We are uniquely positioned to help our clients take back control over their customer relationship, deliver personalised experiences at scale and reduce their cost while increasing their sales.

"Second, in a world where our structure needs to be flatter, agile and remote, we are now truly operating as a platform. Our shared service organisation has proven its efficiency and we have finalised the implementation of our country model. This enabled us to react faster and immediately answer all our client needs in a seamless way."

He added that the global roll-out of Marcel has helped 60,000 employees around the world to share their expertise, learn, collaborate and contribute to client assignments.

(This article first appeared on CampaignLive.co.uk)

Source:
Campaign India

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