Publicis Groupe reports 15% hike in first-half profit, but struggles in North America

The holding company's performance was held aloft by strong results in Europe, Asia and the Middle East.

Publicis Groupe has reported a boost in the first six months of 2019, increasing its net revenue by 1.7% to $4.9 billion compared with the same period of last year. 

The French holding company, which owns agencies including Publicis, Leo Burnett, Bartle Bogle Hegarty, Saatchi & Saatchi, Starcom, Zenith and PR network MSL, performed strongly in Europe, Asia and the Middle East, but less so in the U.S. and Latin America.

Publicis does not specify revenue performance by individual agency. 

Its performance resulted in significant profit growth for the six months ending on June 30. Group profit, or net income, was $397.4 million, a 14.6% increase year-on-year.

While growth across Europe was modest, with net revenue up 3.3% to $1.5 billion, the group posted the strongest upsurge in the Middle East and Africa, where net revenue grew 23.6% to $170.7 million. Asia-Pacific recorded 5% growth to $498.5 million. 

Publicis said that France and the U.K. continued to perform well, with growth of 3.1% and 4.8%, respectively. Italy recorded double-digit growth of 11.4%, thanks to strong new business wins and an increase in existing customer spending. On the downside, Germany experienced a decline of 9.6%.

However, business was less buoyant across the Atlantic. In North America, revenue was down 0.2% to $2.6 billion and in Latin America, it fell 8.9% to $161.7 million. 

Looking further ahead, Publicis expects to "post a sequential improvement" in the second half versus first-half organic growth.

New business wins for Publicis creative agencies included Barclays in the U.K. and Samsung in the U.K. and U.S., while digital agencies under the Publicis Sapient umbrella won Heathrow Airport in the U.K.

Arthur Sadoun, Publicis chairman and chief executive, said the group's performance was helped by a more fruitful Q2 compared with the first, "with organic growth returning to positive territory."

"This growth is healthy and built on solid foundations, with the ramp up of our Q4 new business and continued double-digit growth of our strategic game changers (plus 24% in H1)," he said. 

"But our progress has been slowed down by the ongoing fee reduction on traditional advertising that continued to impact our overall U.S. operations by around 300 [basis points] in the quarter," Sadoun continued. "We have taken a major organizational step by accelerating the implementation of our country model, which helps generating growth through cross-fertilization."

He singled out the U.K. and France for "where this model is already working very well."

Publicis has been busy with acquisitions in the past six months. Its biggest deal concluded this month when it finalized the purchase of data marketing company Epsilon for $3.95 billion. It said the deal would "turbocharge its creative, media and technology operations to accelerate growth."

This story first appeared on campaignlive.co.uk. 

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