Publicis Groupe reports 17.1% organic growth, expects pre-pandemic levels by end of year
Publicis Groupe reported a strong second quarter with organic growth of 17.1%, becoming the third major holding company to rebound from weak results posted in the depths of the pandemic a year ago.
Publicis delivered robust U.S. and Asia Pacific organic growth along with a big bounce back in Europe, which had a weak first quarter. The U.S. scored 15.2% organic growth. Asia Pacific saw 13.6% organic growth while Europe's organic growth surged 23.0%.
Organic growth is a key financial measure that factors out acquisitions, divestitures and effects of exchange rates.
This has all added to a full recovery from last year, says Chairman-CEO Arthur Sadoun.
“Not only did we fully recover the revenue lost in 2020, but all of our KPIs”—key performance indicators—“over the first half exceeded 2019 levels,” Sadoun said. The U.S. and Asia Pacific, in particular, recorded 7% organic growth in second quarter 2021 when compared to 2019. The company's worldwide organic growth came in at 2% in the second quarter when compared to 2019.
Publicis’ net revenue in the second quarter was €2.5 billion ($3.1 billion) compared to €2.3 billion in the second quarter of 2020.
The company attributes all regions posting double-digit organic growth to two factors. First was the continued global recovery from the pandemic including mass re-openings in Europe and a continued uplift in the U.S. economy. Second is Publicis’ Power of One model that “enabled the Groupe to continue to capture the ongoing shift in clients’ investment toward data management, digital media, direct-to-consumer channels and commerce in general.”
Due to the holding company’s ability to “capture a disproportionate part” of its clients’ investment in data and technology, Publicis now expects to fully recover its 2020 organic decline of -6.3%, one year ahead of its initial expectations, with full-year 2021 organic growth of about 7% and operating margin of about 17%, “provided there are no major deteriorations in the global sanitary situation,” Sadoun said.
The U.S. saw high demand for digital media, first-party data management and direct-to-consumer products and services, according to a statement by Publicis. This led to significant growth in the U.S. in large part due to the strong performance of Publicis’ data and technology companies such as Epsilon and Publicis Sapient, which posted organic growth of 31.1% and 27.0%, respectively.
Publicis’ digital media unit, PMX, also saw U.S. organic growth above 25%. Health operations grew by double digits again this quarter. Creative activities were positive, after being flat in the first quarter, with notably strong growth in production activities.
In an interview with Ad Age for this story, Sadoun said Publicis hasn't made any major acquisitions because the company has been focused on integrating Epsilon (acquired in July 2019). However, Sadoun said Publicis is looking for smaller acquisitions, so there is a good chance Publicis will do more deals in the near future, such as the recent acquisition of retailer media platform CitrusAd.
Sadoun said the company is hiring “massively” for its growing data and technology offerings but isn’t anticipating a massive hiring push company-wide.
Publicis is the third major holding company to report its second-quarter results this week. Interpublic Group of Cos. posted second-quarter organic growth of 19.8%, a strong rebound from a year ago. Omnicom reported organic growth of 24.4%, rebuilding from dismal results posted a year ago amid the deep but short pandemic-driven recession. WPP and Dentsu Group report results next month.