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Publicis Groupe grew by 3.9% in India in Q3 2017

The company had grown by 13 per cent in Q2 in India. Globally, the company posted a consolidated revenue of 2,264 million euro in Q3 2017, down 2.2 per cent from 2,315 million euro for the corresponding period in 2016

Publicis Groupe grew by 3.9 per cent in India in the third quarter ending September 30, 2017, down from 13 per cent growth during the second quarter. The company had recorded 0.4 per cent growth in India in Q1, said the French advertising giant in its earnings release for Q3 2017.

Publicis Groupe’s consolidated global revenue in Q3 2017 was 2,264 million euro, down 2.2 per cent from 2,315 million euro for the corresponding period in 2016. Exchange rates had a 93-million euro negative impact, i.e. the equivalent of 4.0 per cent of revenue in Q3 2016.  Net acquisitions contributed 16 million euro to revenue for the period, i.e. the equivalent of 0.7 per cent of revenue in Q3 2016. Growth at constant exchange rates was +1.9 per cent.

Organic growth stood at +1.2 per cent in the third quarter.  As expected, this was an improvement on the Q2 organic growth rate of +0.8 per cent.  The Groupe benefited from the ramp-up of contributions from accounts gained since Q2 2016, in particular those of Walmart, USAA, Asda, Motorola and Lowe’s. As announced, organic growth remained impacted by the SapientRazorfish restructuring and the impact on revenue of the ending of non-profitable contracts. 

At September 30, 2017, Publicis Groupe’s year-to-date revenue stood at 7,107 million euro after 7,068 million euro in 2016, i.e. an increase of 0.6 per cent.  Exchange rates adversely affected revenue by 17 million euro, i.e. the equivalent of 0.2 per cent of revenue for the first nine months of 2016.  Net acquisitions contributed 38 million euro to revenue at September 30, 2017, i.e. the equivalent of 0.5 per cent of revenue from the corresponding period in 2016. Growth at constant exchange rates was 0.8 per cent. Organic growth stood at 0.3 per cent at September 30, 2017.

Breakdown of revenue by region at September 30

Europe grew by 0.6 per cent. After factoring out the impact of acquisitions and exchange rates, organic growth was +2.4 per cent.  France performed well (+2.4 per cent), while the UK and Italy posted strong momentum at +6.2 per cent and +8.8 per cent respectively.  However, Germany recorded negative growth of -5.0 per cent against a very difficult comparable period in 2016.  In Q3 2017, Europe reported organic growth of -1.5 per cent after an upswing of +4.3 per cent at June 30, 2017.  On top of few account losses, this downturn had to be put in the context of a challenging comparable period in Q3 2016 when organic growth was close to 8 per cent. This is also why the main European countries slowed significantly by comparison with June 30, 2017.

North America achieved organic growth of +3.0 per cent in Q3 2017, accelerating away from its +0.2 per cent growth rate in Q2 thanks to the ramp-up of accounts gained since the summer of 2016 (including Lowe’s, Walmart, USAA) and the benefit of early 2017 account wins (among which MolsonCoors and FirstNet), partly offset by the growth challenges of the FMCG sector.  As announced, growth is nonetheless affected by the restructuring of SapientRazorfish as well as by the impact on revenue of unprofitable accounts that have been discontinued.  Over the first nine months of 2017, organic growth remained in negative territory (-0.8 per cent).  On a reported basis, growth stood at +0.1 per cent.

Asia Pacific reported -1.0 per cent and organic growth of -2.0 per cent for the first nine months.  China only grew by +0.4 per cent due to difficulties at one entity under strategic review.  Business grew by 9.5 per cent in Singapore.  In India, the situation is consolidating: after +0.4 per cent in Q1 and +13.0 per cent in Q2, the third quarter saw further growth of +3.9 per cent.

Latin America rose by +8.7 per cent (+3.0 per cent on an organic basis).  In Brazil, revenue fell -0.8 per cent at September 30, after +1.0 per cent at June 30, due to the difficulty in outperforming 2016 when Brazil hosted the Olympic Games in Rio. Mexico continued its strong growth trend with +12.2 per cent.

The Middle East & Africa reported growth of +5.1 per cent (organic growth of +3.6 per cent).

Arthur Sadoun, CEO and Chairman of the Management Board, said, “We committed to delivering sequential improvement of organic growth in Q3 vs Q2. This has been the case even after a slightly better than expected Q2. Our organic growth reached +1.2 per cent in Q3, after -1.2 per cent in Q1 and +0.8 per cent in Q2. This is an encouraging sign in a challenging environment. We have seen a good performance in North America at +3.0 per cent reflecting the last 12 months' account wins. Europe showed a slight 1.5 per cent decline, facing a tough comp at +7.6 per cent in Q3 2016.

Q3 also witnessed some positive momentum, both through new business and talents joining the Groupe. 

Over the course of the summer, the financial markets were exposed to a negative news flow regarding our industry. But the truth is that there is nothing new there. We all know that our industry is facing many challenges. Consumer behaviour is changing, the media landscape is being disrupted, we are confronted with new competition and our clients have been facing challenges around growth, cost and brand trust challenges for years.

At Publicis Groupe, we decided that to rest on our laurels was not an option and we committed to transform for the better in an ambitious and consistent way.

With the acquisition of Sapient, we have put technology at the core of the business transformation of our clients. With The Power of One, we have broken down the silos, allowing us to offer a unique end-to-end solution with consulting, technology, creative, media, digital and obviously data at the core, seamlessly. For the last four months, we have been accelerating the execution of our plan by ‎shifting our model ‎from a communications business to a transformation partner by ‎building our organisation as a platform and putting our people first.

We are beginning to see the fruits of these efforts, but we know we are only in the middle of our transformation journey, as it is a profound change, in a highly volatile market. That is why, even though we have some preliminary encouraging signs, we remain very cautious and determined to win.

We are convinced that we have an unparalleled position in the market through both our ability to help clients with marketing transformation and digital business transformation.  We are committed to achieving our transformation which will put us in a position to drive a significant improvement in organic growth and financial performance.

I look forward to seeing you at our investor day on March 20, 2018.”

On the outlook for the year, the company said, “The first nine months of 2017 showed encouraging signs with, on the one hand, Publicis Groupe returning to positive growth in the second quarter and, as we expected, posting a slight sequential improvement in the third quarter, and on the other hand, a favourable account win momentum which includes prestigious gains such as Diesel, Southwest, Lionsgate and McDonald’s.

We expect better organic growth in the second half of 2017 by comparison with the first half of the year. The longer term goals are well known, i.e. to enhance growth and improve efficiency. The Groupe is in the early stages of rolling out a new business plan with the new management team. A detailed update will be provided in the forthcoming months.”

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