Publicis Groupe's net revenue slides 2.1% to € 2198mn
Registers an 8.3% decline from € 2,397 million in 2017, partly due to the steep under-performance of its US healthcare communications business and GDPR, which it says compelled it to review contracts with clients and publishers
Publicis Groupe’s net revenue fell 2.1 percent to 2198 million euros in the quarter ending June 30, 2018, an 8.3% decline from 2,397 million euro in 2017, partly due to the steep under-performance of its U.S. healthcare communications business. It also blamed the cost of implementing new data protection legislation in Europe (due to GDPR), compelling it to review contracts with clients and publishers.
This is a slowdown by comparison with the +1.6% recorded in Q1 2018 due to the strong comparable period in 2017, especially in North America. The Groupe has yet to register the benefits of the accounts won in the first quarter, which will only contribute to organic growth from Q3 2018 onwards. Furthermore, organic growth was affected by implementation of GDPR (General Data Protection Regulation) in Europe which caused several campaigns to be temporarily suspended at the initiative of clients but also at the initiative of Publicis due to uncertainties surrounding the obtaining of consumer consent via the websites on which these campaigns are rolled out, it said in a statement.
Publicis Health Solutions, a little-known subsidiary that provides sales resources to clients, accounted for the bulk of the revenue decline in the first half, reducing it by 30 million euros to 4.3 billion.
“We were not expecting this sudden dip,” Chief Executive Arthur Sadoun was reported to have told to journalists in a briefing, in reference to the group’s healthcare business.
“No doubt, during H1, we have set the foundations to deliver our full year objectives and even more importantly our 3 years transformation plan. It will not be an easy journey as we must transform ourselves while facing some strong market headwinds. There could be some unexpected bumps in the road like the one we just experienced in the health sector. But we have an outstanding team, unmatched capabilities in data, creativity and technology and a proven winning model that make us very confident for the future,” he added.
The Group stressed the negative impact of currency swings, as the United States accounts for half of its business.
“I reiterate, if necessary, that our market has been facing major challenges and transformation has become a necessity for all,” said Sadoun adding, “First half of 2018 was a busy but very productive period for Publicis Groupe. We have focused on 3 main objectives directly in line with our 3-year transformation plan, Sprint To The Future.”
Since 2014 and the acquisition of Sapient, Publicis Groupe has been undergoing a deep transformation with three key differentiation points. The group is targeting underlying sales growth of 4 percent in 2020 by focusing on its digital arm and bringing about a greater collaboration between its agencies worldwide with Power Of One.
“Being at the core of our client transformation has made us win like never before with our existing clients and in new business, be it globally with Daimler, Campbell's and Marriott, or locally with McDonald’s, Macy’s and Nestlé. The momentum is continuing in Q3, and only last week, we announced the wins of Lenovo media globally, P&G Shopper in the UK and Nestlé in the US,” said Sadoun.
Sprint To The Future is Publicis Groupe’s strategy and execution plan for 2018-2020 and is based on three pillars:
• To provide each client with the keys to its future success: one-to-one consumer engagement at scale, and three strategic game changers, namely data, dynamic creativity and digital business transformation expertise.
• A sprint to accelerate the Groupe’s transformation, notably through the deployment of Global Client Leaders, the roll-out of a country-by-country organization, and an “invest in growth” plan funded by a major cost-cutting program.
• Greater value to shareholders during the transformation, by accelerating organic growth and the percentage operating margin.
The Operating margin was 611 million euro, i.e. a 4.2% decrease from 638 million euro in 2017. By region, the operating margin was 12.2% in Europe, 17.3% in North America, 9.7% in Asia Pacific, 8.2% in Latin America and 1.6% in the Middle East & Africa.
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