Our revenue is up to slightly over 30%: Maurice Levy

Maurice Lévy, Chairman and CEO of Publicis Groupe: “Our revenue is up to slightly over 30%, partly due to the positive impact of exchange rates, and partly to the inclusion of Sapient since completing the acquisition. As we’ll continue to see, this is one of the important milestones of the Groupe’s transformation.

We expected organic growth to be slightly down this quarter, but, on the contrary, it is up almost 1%. This isn’t yet the growth rate we expect to see out of Publicis Groupe, but is nonetheless an encouraging return to growth.

The main event of this early part of the year has been the completion of the Sapient acquisition, an event that gives Publicis Groupe a new strategic dimension while excelling the Groupe’s transformation. The integration process is already underway and the prevailing spirit is excellent.

Today’s sudden, radical changes in lifestyle and consumption in an unprecedentedly digital world leave all economic players facing a new set of challenges. The blurring of boundaries can be found everywhere – in longstanding industry sectors and even in the shift to omni-channel – both have brought the advent of new competitors forcing companies to transform themselves at the risk of “uberisation”. They have to rethink their processes, their practice, their marketing, their customer relations and, more fundamentally, their business model.

In this new environment, I think it would be fair to say that our Groupe is ahead of the curve. With the acquisition of Sapient, Publicis Groupe has become the only global group present all along the value chain - from consulting to marketing, from communications to commerce – brought to life through an outstanding expertise in the most high-performing technologies. We are working on commercial propositions that should enable us to achieve all our medium-term goals.

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

I - Revenue
Publicis Groupe’s consolidated revenue for the first quarter of 2015 was 2,103 million euro, a 31.7% increase on 1,597 million euro for the corresponding period in 2014.
Exchange rates had a 215 million euro positive impact on revenue, i.e. 13.5% of revenue in Q1 2014, as a result of over 50% of the Groupe’s revenue being in dollars and sterling, and due to the weakening of the euro against these two currencies by 21.7% and 11.4% respectively. Expressed in dollars, the Groupe’s revenue in Q1 was 2,366 million dollars (+8.2%). When exchange rates are factored out, revenue growth stands at 16.1%.

Acquisitions contributed 274 million euro or 17.2% of revenue. The completion of the Sapient acquisition is one of the highlights of the first quarter. This transaction is an important milestone in the transformation of Publicis Groupe, making it the undisputed leader of the digital era. Publicis Groupe can now establish itself more rapidly as the leader in corporate digital transformation, at the crossroads of marketing, communications, omni-channel commerce and technology.

Organic growth was +0.9%. Though global economic growth has seen contrasting trends since the start of the year, Publicis Groupe has achieved growth notably as a result of its strong presence in digital which has become its main activity. Digital activities progressed by +4.7% and now account for 50.2% of total revenue. Healthcare also performed well.

1. Revenue by region
Though Europe has benefitted from a combination of positive factors (the strengthening of the dollar, the fall in oil prices, the ECB’s monetary policy), the growth outlook remains limited by persistent unemployment. The US economy is still the world’s bastion of high growth and continued low interest rates should go on shoring up growth throughout 2015. In the emerging markets, the economic environment remained fragile in the first quarter, particularly in Russia and Brazil due to the sharp increases in interest rates to contain the weakening of the ruble and real.

Europe (excluding Russia and Turkey) saw its revenue progress by 21.3%. When acquisitions and the impact of exchange rates are factored out, organic growth stands at 1.7%. France and Germany posted 4.2% and 1.8% growth respectively. Conversely, though the UK market continued to be vibrant, Publicis has been experiencing challenges in several of its businesses and recorded negative growth (-4.2%) in Q1 2015. The southern European countries returned to positive growth (+2.7%), though this growth was achieved against a weak basis of comparison (especially in Greece). Digital posted strong growth (+7.7%).

North America saw its revenue grow by 44.9%. When acquisitions and the impact of exchange rates are factored out, organic growth stands at 0.8%, a modest increase stemming from digital activities where growth was weak too (+1.3%).

The BRIC and MISSAT countries recorded negative organic growth of -2.6% (+13.2% reported growth). In difficult economic environments, revenue fell sharply in both Russia and Brazil (-10%). China dropped 1% due to a sluggish luxury goods sector. India continues on the road to recovery with growth of +5.7%. Mention should also be made of the decline in South Africa (-5.6%) following on the trend observed in 2014.

The Rest of the world recorded growth of 4%.

2. Revenue growth by activity

Publicis Groupe’s growth has been driven by its strong presence in digital. Digital has become the Groupe’s main activity and now accounts for 50.2% of total revenue, thus confirming the raising of the objective to 60% by 2018.