Publicis returns to pre-pandemic levels

In the second quarter of 2021, the French group, number three in the world in communications, posted organic growth up 2% compared to the same period in 2019.

We thought we could make up for lost growth in 2020 in two years, we will finally be able to do it in one year», Explains Arthur Sadoun, Chairman of the Management Board of Publicis Groupe at Figaro. The French group, number three in the world in communications (Publicis, Leo Burnett, Saatchi & Saatchi, Starcom, Zenith …), published Thursday its results for the first half of 2021. Publicis recorded a net income of 2.539 billion euros in second quarter, with organic growth of 17.1%, higher than market expectations (12.9%).

Driven by its activities in the United States and Asia, the communications agency is back to its pre-pandemic levels over the period of April, May and June, with organic growth up 2% compared to the second quarter of 2019. “Investors are monitoring how quickly a company is able to rebuild the value lost during a year heckled by the pandemic”, comments a financial analyst. In 2020, Publicis had lost 600 million euros in net income.

Strategic assets

Arthur Sadoun believes above all that the fruits of Publicis’ investments in data and the digital transformation of companies in recent years, with the integration of Epsilon in 2019 (for $ 4.4 billion), its subsidiary specializing in data and the creation of individualized profiles, and of Sapient (acquired for $ 3.7 billion in 2015), are now clearly reflected in the group’s results. In the first half of the year, organic growth was 9.7%, with an operating margin rate of 16.5%, the highest ever recorded for the group during a first half. And free cash flow is up 22%, to 605 million euros.

The United States, which represents more than 60% of the French group’s revenues, recorded organic growth of 15.2% in the second quarter, with growth of Epsilon and Sapient respectively at 31.1% and 27%. “ Publicis has the right technology and data assets to capture the evolution of brands’ investments towards the management of their proprietary data, digital media and direct-to-consumer sales channels.», Considers the chairman of the management board. In a post-third-party advertising cookie world, media agency clients have a growing need for personalization at scale, to withstand the era of digital platform dominance. To date, the Epsilon subsidiary brings together nearly 250 million personalized profiles (email, postal and / or telephone address), and continues to expand in Europe, where it has 50 million.

On the Old Continent side, organic growth is up 23% in the second quarter of 2021. In France, Publicis is also back to its pre-pandemic levels, with positive organic growth of 1% compared to the same period in 2019. The country represents around 5% of Publicis’ total revenue.

Organic growth expected at 7% for the year

With the recent acquisition of the Australian adtech CitrusAd in July, Publicis also intends to position itself more on the “ retail media », A section of the booming advertising market with the health crisis which has further boosted e-commerce and the number of visitors to online marketplaces. According to a recent study by Goldman Sachs, this source of investment for consumer brands in the United States will become superior to linear TV in 2025.

While remaining cautious in the face of the possibility of an epidemic rebound, Publicis anticipates organic growth of 7% for the year 2021. On Tuesday, the American Omnicom regained market confidence by posting organic growth of 24% in the second quarter of 2021, exceeding analysts’ expectations. The world number two in the sector has not yet released its forecasts for the whole year. For its part, the British WPP, world number one, will publish its results during the month of August.

Finally, Publicis expects an objective of 1.8 billion euros in average debt at the end of 2021. This had reached 3.3 billion in 2020. For the group, it is a question of continuing to deleverage this year by more than ‘€ 1 billion after the acquisition of Epsilon. No major movement is to be expected in the second half of the year. But small acquisitions could complete the Publicis Groupe data offer. “We will continue to invest in areas of growth for our clients,” confirms Arthur Sadoun. In particular, we take a very close look at everything related to the management of proprietary data outside the United States.“.


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