First Quarter 2019 Revenue
April 14,
2019
+1.7% reported and
-1.6%(1)
organic
First Quarter
2019
|
|
|
€ 2,118 m |
|
€ 2,082
m |
|
+1.7% |
|
-1.6% |
|
|
* *
*
Arthur Sadoun, Chairman and CEO of
Publicis Groupe:
"Our First
Quarter net revenue is in line with expectations, confirming our
take on what we anticipate for the year. The Groupe is continuing
to deliver on its transformation path, thanks to Power of One, to
the rollout of our Global Client Leader organization and to the
progressive implementation of our country-led model.
Our strategy is
delivering good results: the attractiveness of our model is
illustrated by the growth of our game changers combining data,
dynamic creativity and business transformation, which recorded a
27% rise in the quarter. The retention of our clients also recorded
a marked improvement. This is helping us to mitigate attrition that
mainly comes from FMCG clients and that has remained high in the
quarter. North America net revenue has been particularly affected
by this attrition that represented around 300 basis points of
impact on the region performance.
However, we
believe that the pace of attrition will slow down in the second
half of 2019. Additionally, as you know, we ranked first in New
Business Wins in 2018, and the largest ones are starting to ramp up
in the second quarter. Taken together, these two items lead us to
confirm our outlook for the year.
We have announced
today a major step forward with the acquisition of Epsilon. This
acquisition will accelerate the implementation of our strategy to
become our clients' preferred partner in their transformation.
Realized at compelling financial terms, the transaction will make
us fully equipped with truly end-to-end suite solutions to address
the increasingly complex needs of our clients in a fast-changing,
data-driven marketing environment.
The Publicis
Groupe will be stronger, with a balanced revenue mix across
diversified expertise. We will be in a position to grasp a larger
share of the marketing and business transformation market, which
will significantly expand our growth opportunities".
* *
*
FIRST QUARTER
2019 NET REVENUE
Publicis Groupe's net revenue in
Q1 2019 was 2,118 million euros, up 1.7% from 2,082 million euros
in 2018. Exchange rates had a positive impact of 93 million euros.
Acquisitions, net of disposals, accounted for a decrease in net
revenue of 18 million euros, reflecting the disposal of PHS
effective at the end of January 2019 not entirely offset by the
contribution of acquisitions, notably Xebia and Soft Computing in
France.
Organic growth stood at -1.8%, or
-1.6% excluding PHS, mainly reflecting attrition of a handful of
FMCG clients. Net revenue from strategic game changers grew
27%.
Breakdown of Q1 2019 net revenue by region
EUR |
Net revenue |
Reported |
Organic |
Organic |
Million |
Q1 2019 |
Q1 2018 |
growth |
growth |
Growth
excl. PHS |
Europe |
633 |
614 |
+3.1% |
+0.8% |
+0.7% |
North America |
1,139 |
1,142 |
-0.3% |
-4.6% |
-4.3% |
Asia Pacific |
207 |
199 |
+4.0% |
+1.2% |
+1.2% |
Latin America |
66 |
72 |
-8.3% |
-6.3% |
-6.3% |
Middle East
& Africa |
73 |
55 |
+32.7% |
+26.6% |
+26.6% |
Total |
2,118 |
2,082 |
+1.7% |
-1.8% |
-1.6% |
Net revenue in Europe was up 3.1% or up 0.7% on an
organic basis excluding PHS. France and the UK continued to perform
well with an increase in net revenue of respectively 4.2% and 5.1%
in the quarter. Italy recorded double digit growth at +28.4% with
strong impact from accounts wins and clients who have increased the
scope of work. It was the opposite for Germany where the drop
was at 10.1%.
North America net revenue in Q1
2019 was broadly flat on a reported basis but posted a decline of
4.3% organically, excluding PHS. This mostly reflected attrition
that continued to impact traditional advertising, the effect of a
handful of media losses from the third quarter 2018 and a strong
comparable base in Q1 2018.
Asia Pacific net revenue was up
4.0% on a reported basis and 1.2% on an organic basis, with
Singapore at +7.0% and India at +9.3%. China was slightly negative
at -0.3%.
Latin America recorded net revenue
down 8.3% on a reported basis, and down 6.3% on an organic basis.
This reflected a tough comparable base. Brazil at -6.3% organically
and Mexico at -11.4% explain the negative growth in this
region.
The Middle East & Africa
region reported a rise of 32.7% in net revenue, or 26.6% on an
organic basis.
Net revenue at March 31, 2019 by client sector (1)
-
Based on 2,667 clients representing 87% of net
revenue
NET debt
Net debt totaled 885 million euros
at the end of March 2019, compared with a cash positive situation
of 288 million euros at year-end 2018. The Group's average net debt
stood at 229 million euros in the first quarter 2019, compared to
1,001 million euros in the first quarter 2018.
Net debt on financial leases has been reclassified in Lease
liabilities since January 1, 2018 after IFRS16 implementation.
Acquisitions
& disposals AT MARCH 31, 2019
On January 31, Publicis Groupe
announced that it has closed on the sale of Publicis Health Solutions (PHS) to Altamont Capital
Partners (Altamont). PHS, which was previously housed under
Publicis Health, Publicis Groupe's healthcare solutions network, is
a contract sales and commercialization organization that works with
a range of pharmaceutical, biotechnology, medical device and
diagnostics companies, and provides a suite of services through
operating brands that include Touchpoint, PDI, Tardis Medical,
PHrequency and CustomPoint Recruiting.
On February 7, Publicis Groupe
announced the completion of the acquisition of Soft Computing (82.99% of the share capital), a leading
French data marketing company, at 25 euro per share, i.e. a total
consideration of approximately 43.4 million euro. This acquisition
has been made from the firm's founders and their families after all
conditions precedent in the agreement of December 19, 2018 were
met. The price offered is at a premium of 66.67% to the closing
price on December 19, 2018. Created in 1984 by Eric Fischmeister
and Gilles Venturi, Soft Computing specializes in data and its use
in enhancing marketing and transforming the customer experience.
With over 400 experts, this market-leading company provides its
services to most of the major retail, finance and services
companies.
SUBSEQUENT EVENTS
- PUBLICIS GROUPE TO ACQUIRE EPSILON
On 14 April 2019, Publicis Groupe
today announced it has entered into an agreement with Alliance Data
Systems Corporation (NYSE: ADS) under which Publicis Groupe will
acquire Alliance Data's Epsilon business for a net purchase price
of $3.95 billion after tax step-up (total cash consideration of
$4.40bn) and build a strategic partnership with Alliance Data
remaining business. This acquisition will accelerate the
implementation of Publicis' strategy to become the preferred
transformation partner for its clients.
The Directoire (Management Board)
and the Conseil de Surveillance (Supervisory Board) of Publicis
Groupe have unanimously approved this transaction considering it a
one-time opportunity to seize, given the evolution of the industry
and the implying transformation of marketing solutions.
The transaction is subject to
customary approvals and is expected to close in the third quarter
2019.
Full details are available on Publicis Groupe website on
www.publicisgroupe.com
OUTLOOK
2019
We are confirming our outlook for 2019 for Publicis Groupe
standalone. We expect a higher organic growth in 2019 compared to
2018, a 30 to 50-basis point increase of our operating margin rate
and an increase in headline diluted EPS between 5% and 10% at
constant exchange rates and excluding "BEAT" tax.
* *
*
Disclaimer
Certain information contained in
this document, other than historical information, may constitute
forward-looking statements or unaudited financial forecasts.
These forward-looking statements and forecasts are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected. These forward-looking statements
and forecasts are presented as at the date of this document and,
other than as required by applicable law, Publicis Groupe does not
assume any obligation to update them to reflect new information or
events or for any other reason. Publicis Groupe urges you
carefully to consider the risk factors that may affect its
business, as set out in the Registration Documents filed with the
French Autorité des Marchés Financiers (AMF) and which is available
on the website of Publicis Groupe (www.publicisgroupe.com),
including an unfavorable economic climate, an extremely competitive
market sector, the possibility that our clients could seek to
terminate their contracts with us at short notice, the fact that a
substantial part of the Group's revenue is derived from certain key
clients, conflicts of interest between advertisers active in the
same sector, the Group's dependence on its directors and employees,
laws and regulations which apply to the Group's business, legal
action brought against the Group based on allegations that certain
of the Group's commercials are deceptive or misleading or that the
products of certain clients are defective, the strategy of growing
through acquisitions, the depreciation of goodwill and assets
listed on the Group's balance sheet, the Group's presence in
emerging markets, exposure to liquidity risk, a drop in the Group's
credit rating and exposure to the risks of financial markets.
About Publicis
Groupe - The Power of One
Publicis Groupe [Euronext Paris FR0000130577, CAC 40] is a global
leader in marketing, communication, and digital transformation,
driven through the alchemy of creativity and technology. Publicis
Groupe offers its clients seamless access to its tools and
expertise through modular offering. Publicis Groupe is organized
across four Solutions hubs: Publicis
Communications (Publicis Worldwide, Saatchi & Saatchi, Leo
Burnett, BBH, Marcel, Fallon, MSL, Prodigious), Publicis
Media (Starcom, Zenith, Spark Foundry, Blue 449, Performics,
Digitas), Publicis Sapient and Publicis Health. Present
in over 100 countries, Publicis Groupe employs nearly 75,000
professionals.
www.publicisgroupe.com | Twitter:@PublicisGroupe |
Facebook | LinkedIn | YouTube | Viva la
Difference!
Contacts Publicis
Groupe
Clément Leonarduzzi |
Corporate Communications |
+ 33
(0) 6 79 27 47 31 |
clement.leonarduzzi@publicisconsultants.com |
Sabrina Pittea / Karen Lim |
Corporate Communications |
+ 33
(0)1 44 43 76 91 / 78 61 |
sabrina.pittea@publicisgroupe.com |
Alessandra Girolami |
Investor Relations |
+ 33
(0)1 44 43 77 88 |
alessandra.girolami@publicisgroupe.com |
Chi-Chung Lo |
Investor Relations |
+ 33
(0)1 44 43 66 69 |
chi-chung.lo@publicisgroupe.com |
Appendices
Net revenue:
organic growth calculation
(million euro) |
Q1 |
|
Impact of currency
at end March 2019
(million euro) |
2018 net revenue |
2,082 |
|
GBP
(2) |
3 |
Currency
impact (2) |
93 |
|
USD
(2) |
90 |
2018 net
revenue (1) at 2019
exchange rates (a) |
2,175 |
|
Others |
0 |
2018 net
revenue before acquisition impact (b) |
2,136 |
|
Total |
93 |
Net
revenue from acquisitions (1) |
(18) |
|
|
2019 net revenue |
2,118 |
|
|
Organic growth (b/a) |
-1,8% |
|
|
Organic growth excl. PHS (3) |
-1.6% |
|
|
(1) Acquisitions (Optix, Independent Ideas, Ecosys, Domaines
Publics, Payer Science, One Digital, The Shed, Kindred, Xebia, IDC
Creation, Brilliant, Soft Computing), net of disposals.
(2)
EUR = USD 1,136 on average in Q1 2019 vs. USD
1,229 on average in Q1 2018
EUR = GBP 0,872 on average in Q1 2019 vs. GBP 0,883 on average in
Q1 2018
(3) Publicis Groupe made effective the disposal of Publicis
Health Services in January 2019
New Business: Main wins in 3M 2019
Google (USA), Barclays (UK),
Samsung (UK & USA), TikTok (USA), Massage Envy (USA),
Cumberland Farms (USA), Nestlé (Australia), RAMS Financial Group
(Australia), Health Promotion Board (HPB) (Singapore), Banco Safra
(Brazil), Perdigão (Brazil), Distell (South Africa)
Agate Katowice (Poland), Driven
Brands (USA), E Wedel (Poland), Fulfill (UK), NBC Entertainment
(USA), Rio Tinto (Australia)
Goldman Sachs (USA), World Fuel
Services Corporation (USA), UBS AG (USA), Heathrow Airport (UK)
Abbott (USA & Canada), Abbvie
(USA), Amazon (USA), Boehringer Ingelheim (Global), Bristol-Myers
Squibb (France), Roche (Global & EMEA), Merck & Co. (USA),
Novo Nordisk (USA), Sanofi Genzyme (USA), Sunovion Pharmaceuticals,
Inc. (USA & Canada)
2019 press
releases
08-01-2019 Publicis
Groupe appoints Michael Rebelo as Chief Executive Officer,
Australia & New-Zealand
24-01-2019 Publicis
Groupe appoints Bertilla Teo and Michael Lee as co-Chief Executive
Officers, Greater China
31-01-2019 Publicis
Groupe Launches Innovative Learning Experiences to Speed
Transformation to a Platform
31-01-2019 Publicis
Groupe Completes Divestiture of Pharmaceutical Contract
Commercialization and Sales Unit (PHS)
01-02-2019 Publicis
Groupe takes full ownership of Blue 449 in the UK
01-02-2019 Jacco ter
Schegget Named CEO Publicis Groupe Belgium and the Netherlands
06-02-2019 Publicis
Groupe: 2018 Annual Results
07-02-2019 Publicis
Groupe completes acquisition of Soft Computing
11-02-2019 Publicis
Groupe Appoints Alessandra Girolami as VP, Investor Relations &
Strategic Financial Planning
14-02-2019 Publicis
Groupe Enters into Exclusive Negotiations with Ycor for the Sale of
Its Digital Services Subsidiary, Proximedia
27-02-2019 Publicis
Groupe Malaysia Appoints Abraham Varughese as Chief Creative
Officer
07-03-2019 Supervisory
Board
26-03-2019 Publicis
Groupe Named Adobe's Digital Experience Partner Of The Year For The
Americas
Definitions
Net revenue or
Revenue less pass-through costs: Pass-through costs mainly
concern production and media activities, as well as various
expenses incumbent on clients. These items that can be re-billed to
clients do not come within the scope of assessment of operations,
net revenue is a more relevant indicator to measure the operational
performance of the Groupe's activities.
Organic
growth: Change in net revenue excluding the impact of
acquisitions, disposals and currencies.
EBITDA:
Operating margin before depreciation.
Operating
margin: Revenue after personnel costs, other operating expenses
(excl. non-current income and expense) and depreciation (excl.
amortization of intangibles arising on acquisitions).
Operating margin
rate: Operating margin as a percentage of revenue.
Headline Group
Net Income: Group net income after elimination of impairment
charges, amortization of intangibles arising from acquisitions,
main capital gains (or losses) on disposals, effect of US tax
reform and revaluation of earn-out payments
EPS (Earnings per
share): Group net income divided by average number of shares,
not diluted.
EPS, diluted
(Earnings per share, diluted): Group net income divided by
average number of shares, diluted.
Headline EPS,
diluted (Headline Earnings per share, diluted): Group net
income after elimination of impairment charges, amortization of
intangibles arising from acquisitions, main capital gains (or
losses) on disposals, effect of US tax reform and revaluation of
earn-out payments, divided by average number of shares,
diluted.
Capex: Net
acquisitions of tangible and intangible assets, excluding financial
investments and other financial assets.
Free Cash Flow
before changes in working capital requirements: Net cash flow
from operating activities less interests paid & received,
repayment of lease liabilities & related interests and changes
in WCR linked to operating activities
Net Debt (or
financial net debt): Sum of long and short financial debt and
associated derivatives, net of treasury and cash equivalents.
Average net
debt: Average of monthly net debt at end of month.
Dividend
pay-out: Dividend per share / Headline diluted EPS.
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Publicis Groupe via Globenewswire
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