Speaking to analysts at Publicis Groupe's full-year results
presentation in Paris this morning, Chairman and CEO Maurice
Lévy – who hands over to his
successor Arthur Sadoun, currently CEO of Publicis
Communications, on June 1 – blamed the North America results
on the impact of media account losses in 2015 and the first half of
2016, serious issues at digital agency Razorfish, low market growth in the region,
and comparison with particularly good results the previous year,
when North America grew by 6.3% in the fourth quarter of 2015.
Mr. Lévy said, "We were hurt big time in Q4 – more
than we expected. The impact will still be felt in the first and
maybe the second quarters [of 2017]. We weren't expecting the
market going south, and the difficulties with Razorfish. If
Razorfish had not had negative growth, there would have been no
decline in the U.S."
He said that the
death of Razorfish CEO Tom Adamski in October 2015 was a blow
to the company, but said that he still considered Razorfish to have
been an "excellent acquisition" in the long term. Publicis Groupe
bought Razorfish in 2009, and in November 2016 merged it with
SapientNitro
to form SapientRazorfish. (The company said in its earnings
statement that given slower-than-anticipated growth from its
digital businesses, it booked a non-cash depreciation charge of
$1.54 billion, almost all of which was for Publicis.Sapient.)
Of the other regions, only Europe (+5.1%) and Middle East &
Africa (+1.3) posted any growth in organic revenue in the fourth
quarter. Asia Pacific was down by 1.5% and Latin America by 1.1%.
For full-year 2016, all regions except North America posted some
growth.
Mr. Lévy stressed that 2016 was about transforming an
"advertising holding company" into a "connecting company" with the
new "Power
of One" approach that eliminates silos and "has the client at
the core." He also spoke of promising new business momentum,
including recent wins from HSBC, KFC, Merck, and Kellogg's Special K.
He added that 2016 was a "busy year" and said it was "like
changing the tire of a car while driving" in terms of transforming
the group while pitching to retain and to win business.
After 30 years as leader of Publicis Groupe, Mr. Lévy
will present his last financial results for the company when the
first quarter figures for 2017 are published in May, before handing
over to Mr. Sadoun and moving on to take up the position of chair,
of Publicis Groupe's supervisory board. The current chair,
Elisabeth Badinter (daughter of Publicis Groupe founder Marcel
Bleustein-Blanchet, who was the company's first and only leader
other than Mr. Levy), will remain on the board.
First quarter results in May are not likely to be a big
improvement, Mr. Lévy warned. He said, "There is a lot of
uncertainty around a clear hard Brexit … and with the
election of Donald Trump, we do not know what will happen in terms
of policies and executive orders. We have seen the comeback of
Vladimir Putin and that of China. These events will result in
geopolitical changes with economic consequences that no one can
predict. We can expect that 2017 will be a period of uncertainty
– particularly if we add to this the French and German
elections."
However, Mr. Lévy expects tthat he second quarter of 2017
to be better than the first three months, "gaining momentum" for
the rest of the year. He added, "It looks like Donald Trump's
objective is to give more jobs and better pay to Americans, which
may fuel growth not only in the U.S. but worldwide – the U.S.
generates growth for the world."
Speaking about handing over to Mr. Sadoun, Mr. Lévy said,
"I am sure he's the right choice for the future of the group. We
also have Steve King [CEO of Publicis Media] joining the directoire
[management board]. They were the two selected ones in the finals
and they will be working closely together as a real team. They will
get the Publicis Groupe back to growth pretty quickly and will make
it greater."