Publicis Groupe Q1 Revenues up 32%, Boosted by Sapient Deal, Exchange Rates

Maurice Lévy Claims 'Noise' Around Kickbacks, Rebates is 'Mad'

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Maurice Levy
Maurice Levy

Publicis Groupe has reported revenues up 32% to $2.24 billion in the first quarter of 2015. Revenues were boosted 16% by the Sapient acquisition and 15% by the positive impact of exchange rates.

The acquisition of digital and tech firm Sapient also helped digital become the company's main area of focus for the first time, accounting for 50% of revenues, up from 40% in the first quarter of 2014.

Maurice Lévy, chairman and CEO of Publicis Groupe, announced a "90-day plan" to combine and connect Sapient, including sharing talent strategy, implementing operational savings and synergies, and leveraging Sapient's India-based assets.

In a statement, Mr. Lévy said, "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 outstanding expertise in the most high-performing technologies."

The negative publicity surround the ongoing kickbacks and rebates debates in the U.S. were also a topic of conversation during a conference call with analysts.

"We are not suffering at all from this kickback situation. Most of our clients know exactly what our practices are. They know that we are extremely rigorous and that we are playing by the rules," Mr. Lévy said when asked whether clients were being more demanding in terms of billings and fees. "So we are suffering as an industry, because there has been a lot of noise, which has been made by a former Mediacom employee. But when it comes to [Publicis Groupe], we have contracts which are scrupulously respected and which have been audited on a regular basis by our clients. It's mad that there has been so much noise made about somebody who left the industry seven or eight years ago, who probably has no idea what's going on."

Organic growth, excluding acquisitions, was 0.9% across the group; in North America it was 0.8%. Overall revenues were up 45% to $1.23 billion in the region.

Publicis Groupe, whose networks include Leo Burnett, Saatchi & Saatchi and Starcom Mediavest, predicted the group's organic growth would rise to almost 3% for the full year. "In 2016, we will start outperforming the market, and we will maintain that for years to come," Mr. Lévy said. "I feel good about management and confident about the situation."

Australia, Egypt, Hungary, India, Korea, Philippines, Poland, Saudi Arabia, Singapore and Venezuela showed organic growth of more than 5% in the first quarter of the year. In the traditionally faster-growing BRIC and MISSAT (Brazil, Russia, India, China and Mexico, Indonesia, Singapore, South Africa and Turkey) countries, organic growth fell 3%, although revenues were up 13%.

European revenues grew 21%, with organic growth at 2%, reaching 4% in the group's home territory of France. Southern Europe returned to organic growth, recording a 3% increase, but that was against weak comparisons.

The U.K. saw growth fall 4%, which Mr. Lévy blamed on the fact that the London office of Publicis Worldwide had not had a CEO for two years. Guy Wieynk recently joined from AKQA. Blackberry's global account, which effectively ceased consumer spending last year, was also handled from the U.K.

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