Maurice Levy's Successor to be Named by February 2017

Publicis Groupe Organic Revenues up 2.7% in Q2

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Maurice Levy
Maurice Levy Credit: Christian Alminana/Courtesy of Cannes Lions International Festival of Creativity

Publicis Groupe chairman and CEO Maurice Lévy confirmed that his successor will be announced some time between December 2016 and February 2017, ahead of the French communications group's annual general meeting, which will take place in Paris in May.

Speaking to analysts at Publicis Groupe's 2016 first half results presentation, Mr. Lévy added, "for the time being we are working only on internal candidates."

The internal candidate everyone is watching is Arthur Sadoun, who was elevated to CEO of the Publicis Worldwide network in mid-2013 and put in charge of all the creative networks as CEO of the new Publicis Communications in a major Publicis Groupe re-org at the end of 2015. Apart from Mr. Sadoun's closely-watched tryout in key roles for Mr. Levy's job, it's unclear if any other internal candidates are being seriously considered.

In an interview later with Ad Age, Mr. Levy said: "The board will start to work seriously on it as soon as September and make their decision at the end of this year, or the beginning of the next. It's the most important task the board has. Obviously they have already done a lot of background work, but it takes time. I'm not a member of the advisory board. I am there just as support. I can shed light on some situations and bring the coffee."

Publicis Groupe reported organic growth (excluding acquisitions and currency swings) of 2.7% for the second quarter of the year, with revenues of $2.7 billion. Revenues for the first half of the year were $5.3 billion, up 4.6% on the first half of 2015.

North America's organic growth rate was -0.1% in the second quarter, after the region was hit hard by last year's media losses. "We are working hard to mitigate the impact and to improve the situation," Mr. Lévy said.

During the spate of 2015 media account reviews, Publicis Groupe lost its massive Coca-Cola account, and lost its longstanding Procter & Gamble multibillion-dollar media business to rival Omnicom Group.

Publicis' Mediavest lost the Walmart media account in February, but the group has been working to strengthen its non-media relationship with the retailer this year, and recently created a new entity to house Walmart's U.S. creative and in-store advertising, as well as some non-advertising duties including technology and corporate reputation.

"We will feel the full impact of the losses in North America in the third and fourth quarters," Mr. Levy told Ad Age. "For example, the P&G loss will impact only from July 1."

Publicis Groupe's Saatchi & Saatchi won Walmart-owned Asda's $145 million U.K. business without a pitch in April. And earlier this month Publicis Groupe and Walmart began creating a new entity to house the retailer's U.S. creative and in-store advertising, along with other pieces of business that do not involve advertising.

"What we have to do is develop an even more collaborative approach between agencies and work with the Power of One concept big time," Mr. Levy added. "We've had a few wins and we will feel the benefit from the big Walmart [account] as soon as the fall. I'm confident the situation in the U.S. will be recovered pretty quickly. Next year we will benefit from all our efforts and the work we have done."

Saatchi & Saatchi was also this week named as one of GlaxoSmithKline Consumer Healthcare's two largest global communications partners, alongside WPP's Grey Worldwide. The consumer healthcare giant reviewed its business following a merger with Novartis Consumer Health, with which Saatchi & Saatchi had an existing relationship.

Publicis Groupe, whose agencies include Leo Burnett, Saatchi & Saatchi, Bartle Bogle Hegarty, StarcomMediaVest and Zenithoptimedia, saw its second quarter results boosted by a strong performance in Europe, where organic growth reached 7.3% in the second quarter, and 5.5% for the first half of the year. For the second half of the year, digital growth in the region was 12.5%, while Germany and Italy both grew around 9%.

Mr. Lévy spoke on the call with analysts about the impact of last month's shock Brexit decision, when the U.K. voted in a referendum to leave the European Union. "We are in 'terra incognita' because nobody knows exactly what will happen. We know that there is not a clear plan ... There is a blank sheet of paper and we have to build a solution, " he said.

"After the emotion, I believe that everyone will work extremely positively toward the future … and Europe will be much stronger and more united … and the U.K. will have to find a way to leave the EU."

"We believe that if there is a deterioration it will come very progressively and it will not be a sharp decrease of any indicator ... It is not impossible that at the end of the day things will remain relatively stable." (And Europeans will continue to take their traditional August vacations; Mr. Levy leaves in 10 days for his own summer break, in Provence and then trekking in the mountains.)

In Asia Pacific, organic growth was 5.5% in the second quarter. In Latin America, it reached 4.8% and in Middle East & Africa it was down -1.5%.

Digital growth across the group in the first half of the year was 6.3%, reaching 23% in Asia Pacific, 12.5% in Europe and 10.7% in the Middle East and Africa. Latin America, at 0.9%, was the only region to show any analog growth, with analog across the group down by -0.8%.

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