• by Larissa Faw , February 6, 2020

Publicis Groupe’s much-touted transformation has yet to pay off with the Groupe reporting a 2.3% organic revenue decline for full year 2019. The results were not a surprise as the company warned analysts of the negative outlook during its October financial call. 

Investors seemed unfazed, boosting the company’s stock price by 3% in early afternoon trading on the Paris Exchange.

“The headwinds we are facing continued to be strong,” said Arthur Sadoun, Chairman/CEO Publicis Groupe. He attributes this poor performance to factors including client losses and the ongoing struggle to integrate Publicis Sapient in the U.S.   

Publicis Groupe’s net revenue for the full year 2019 was up 9.3% to $10.78 billion (9.80 billion euros), compared with $9.87 billion (8.97 billion euros) in 2018. Acquisitions (net of disposals) contributed $836 million for the full year, reflecting the contribution of Epsilon from July 2019, and of other acquisitions such as Xebia, Soft Computing and Rauxa. 

Publicis Groupe's net revenue in Q4 2019 was up 15.2% to $3.16 billion (2.87 billion euros) compared to $2.75 billion (2.50 billion euros) year-over-year. Organic growth in Q4 was 4.5%.

Google’s recent decision to eliminate cookies will have “significant impact” across the entire industry, but the real aftermath is unknown, says Sadoun. He believes the company will have “limited risk” thanks to its Epsilon deal. For one, Epsilon is not reliant on cookies, he told analysts Tuesday. 

Google’s move presents an opportunity for clients to seek alternative ways to reach and track consumers, all of which the Groupe is uniquely positioned to benefit from, Sadoun added. Nonetheless, “the walls of the walled gardens are only going to get higher,” he believes.

While the Groupe reported significant new client wins, notably Disney, Novartis, and LVMH in Europe, this new business has yet to impact the company’s financials. 

The Groupe is undergoing what it calls a “restructuring” that includes layoffs  while adding some new faces. Last year, several high-profile names left the company, including Nick Law, Emma Montgomery and Gerard Caputo. 

At the same time, the Groupe invested an additional $100 million in talent and the company claims it promoted 100 leaders internally, and hired 150 top executives. “We are taking a conservative view on attrition,” says Sadoun explaining the Groupe is likely to continue to see an exodus of talent over the coming year.

Publicis certainly is gambling its financial future with the $4.45 billion acquisition of Epsilon. Amortization costs from acquisitions totaled $224 million in 2019, up from $76 million (69 million euro) in 2018.

Full year net revenue in North America was up 15.0% with an organic revenue decline of 3.5%. Organic growth in Asia Pacific was 0.8% and organic revenues were down 4.9% for the year in Latin America. The Middle East and Africa region was a bright spot with net revenue rising by 14.6%  with organic growth 10.0%, driven by the United Arab Emirates.

In 2020 “our priority is to deliver our organic growth recovery plan by progressively returning to growth in our traditional activities; preparing our future revenue streams with Epsilon and Publicis Sapient, and of course continuing to invest in talents and learning & development to strengthen our offer,” stated Sadoun.

Organic growth is expected to range between -2% and +1%. “We are going to achieve our goals, but it is going to be step by step.”