Home / Marketing/ Publicis sales tumble; CEO doubles down on his strategy

Publicis sales tumble; CEO doubles down on his strategy


Comments / {{hitsCtrl.values.hits}} Views / Friday, 20 July 2018 00:00


PARIS (Reuters): France’s Publicis Groupe SA reported an unexpected drop in second quarter sales yesterday, pointing to the steep underperformance of its US healthcare communications business.

The world’s third largest advertising group said net revenue fell 2.1% to EUR 2.2 billion ($ 2.56 billion), excluding the impact of acquisitions and foreign exchange, compared to a consensus estimate for growth of 1.1%.

However, Publicis affirmed its full-year targets, citing growth in its operating margin and earnings per share over the first half of the year.

The discrepancy between the results and Publicis’ outlook may unnerve investors who have become wary of the ad industry as it faces challenges online from technology companies such as Alphabet Inc. and lower spending from large advertisers.

Omnicom Group Inc., the world’s second-biggest advertising group, on Tuesday reported slightly lower-than-expected second-quarter organic growth, sending its shares down by about 9%. “We were not expecting this sudden dip,” Chief Executive Arthur Sadoun told reporters in a briefing, in reference to the group’s healthcare business. 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 EUR 30 million to EUR 4.3 billion.

When asked if the business was up for sale, Sadoun said it was “under strategic review”.

The Paris-based group stressed the negative impact of currency swings, as the United States accounts for half of its business.

It also blamed the cost of implementing new data protection legislation in Europe, compelling it to review contracts with clients and publishers.

Publicis affirmed that it can achieve higher year-over-year growth and operating margin in 2018, and stuck to the strategy it laid out in March.

Under the plan Sadoun presented a few months after replacing company veteran and current Chairman Maurice Levy as CEO, the group is targeting underlying sales growth of 4% in 2020 by focusing on its digital arm Publicis.Sapient and fostering greater collaboration between its many agencies worldwide.

This was instrumental in gaining new global clients in the first quarter such as Daimler’s Mercedes-Benz brand, Carrefour and Marriott International, Publicis has said.

The market remains tough, Sadoun acknowledged, with added uncertainty caused by the abrupt resignation of WPP PLC founder and CEO Martin Sorrell from the Publicis’ archrival in April.

“We’re convinced that we have the right business model,” Sadoun said.

“And at the same time, we still have 90% of our business that needs improvement. It’s just the beginning.” 


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

The rate of exchange, capital flight and the Central Bank

Friday, 21 September 2018

The Central Bank (CBSL) exists for the sole purpose of price stability. Its controls on the financial system and monetary policy exist to maintain price stability. As put forth many times by the Governor, the failing of the CBSL to control inflation


Red flag over the Sri Lankan Navy

Friday, 21 September 2018

Shocking story Rusiripala, a former banker in Sri Lanka, who has taken to writing in Daily FT, is perturbed by the red flag I have raised (Daily FT article 18 September) over the shocking charge that our Navy had operated a ransom gang that had abduc


The bald truth about fake news, etc.

Friday, 21 September 2018

In its most innocent forms, we may all enjoy a bit of ‘fake news’ and go to bed with a lighter heart and clean conscience. A meme on Facebook urging social media consumers to caution – “You can’t believe everything you read on the internet


Withholding Taxes – What, why, when?

Thursday, 20 September 2018

The tax regime in Sri Lanka historically imposes WHT on both domestic as well as cross border payments. WHT on domestic payments eases revenue collection (e.g.: PAYE) while WHT on cross border payments are adopted by most countries to ensure that the


Columnists More