Publicis organic revenue grows 0.9 per cent as it reaches digital landmark

Publicis Groupe saw organic revenue grow 0.9 per cent in the first quarter of 2015 - despite significant declines in the UK, Russia and Brazil - with digital now accounting for more than half of revenue.

Maurice Levy: Publicis Groupe chairman and CEO
Maurice Levy: Publicis Groupe chairman and CEO

Overall revenue for the French PR and advertising giant grew 31.7 per cent to €2.103bn ($2.248bn, or £1.513bn), of which 17.2 per cent was attributed to acquisitions, most notably Sapient – the deal for the group was completed in the quarter. Growth was 16.1 per cent stripping out exchange rates.

Digital revenue grew 4.7 per cent and digital now accounts for 50.2 per cent of revenue. Analogue revenue fell 1.5 per cent. Digital growth was strongest in the BRIC and MISSAT countries (24.8 per cent) and the rest of the world (20.5 per cent), with more modest digital growth of 7.7 per cent in Europe and 1.3 per cent in North America.

Overall, organic growth in Europe was 1.7 per cent, led by France and Germany, up 4.2 and 1.8 per cent respectively.

The UK declined by 4.2 per cent, with the country "experiencing challenges in several of its businesses", although the UK market "continued to be vibrant". The southern European countries returned to positive growth (+2.7 per cent).

Publicis said Europe’s "growth outlook remains limited by persistent unemployment", despite benefitting from the strengthening of the dollar, the fall in oil prices and the ECB’s monetary policy.

Organic growth in North America was 0.8 per cent, "a modest increase stemming from digital activities where growth was weak too (+1.3 per cent)".

The BRIC and MISSAT countries recorded negative organic growth of -2.6 per cent. In "difficult economic environments", revenue fell sharply in both Russia and Brazil (-10 per cent). China dropped one per cent due to a "sluggish luxury goods sector". India grew 5.7 per cent and South Africa fell 5.6 per cent.

Growth in the rest of the world was four per cent.

Publicis said it expected organic growth to be higher in the second half-year. "The group’s high exposure to digital activities will ensure its future growth and the continued improvement of its margins between now and 2018," it stated.

Maurice Lévy, chairman and CEO, said: "We expected organic growth to be slightly down this quarter, but, on the contrary, it is up almost one per cent. This isn’t yet the growth rate we expect to see out of Publicis Groupe, but is nonetheless an encouraging return to growth."

He said the integration of Sapient was already under way "and the prevailing spirit is excellent".

"For now, we are gradually implementing our growth programme. The second quarter will be better than the first, albeit with modest growth; as announced, that of the group should be considerably stronger in the second half of the year."

The company made four acquisitions in total in the quarter: Expicient, an inventory and order management systems firm; South African strategic comms agency Epic Communications; press agency Relaxnews; and Monkees, the French digital marketing and social media agency.

Publicis continued its share buyback programme in the quarter, acquiring just over 2.4 million shares from the Badinter family for €175.8m ($187.9m, or £126.4m). The price per share was €73.03 ($78.06, or £52.52).

February saw the formal merger of two Publicis PR companies, Capital MSL and Communications Networking Consulting (CNC), creating a new entity called CNC.

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