Publicis Groupe Grows 2.9% in First Quarter, but Levy Warns on Second and Third

Sapient Up 10% One Year After $3.7 Billion Acquisition by Holding Company

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Publicis Groupe reported revenue of $2.3 billion and organic growth of 2.9% in the first quarter of the year, driven by new business and a strong performance by Sapient. Including acquisitions, growth reached 8.9%.

Credit: Courtesy Publicis Groupe

Maurice Lévy, the chairman and CEO of Publicis Groupe, said in a statement that "organic growth was higher than expected and largely driven by accounts won at the end of 2015 and the good momentum in the media market. I would like to emphasize the very good performance of Sapient, whose 10% growth provides confirmation of its potential."

The French group – whose agencies include Leo Burnett, Saatchi & Saatchi, Bartle Bogle Hegarty, StarcomMediavest, and ZenithOptimediaacquired Sapient for $3.7 billion at the start of 2015. Last year, Publicis Groupe's organic growth rate for the fourth quarter was 2.8%, but for the full year it was just 1.5%.

However, Mr. Lévy was more cautious about the next two quarters of this year, which he said would be affected more significantly by the losses that occurred during the 2015 media account reviews. This included the loss of its longstanding Procter & Gamble multibillion-dollar media business to rival Omnicom Group.

"Our 2016 priority remains the finalization of our own transformation," Mr. Lévy said. At the end of last year, Publicis Groupe announced it was ditching the silos traditionally formed around agency brands, and reorganising into four "solutions hubs" – Publicis Communications, Publicis Media, Publicis.Sapient and Publicis Health.

"By this summer, this major undertaking should be finalized, with the complete disappearance of silos and holding company status," said Mr. Levy. "The group's other two priorities, he said, are to return to "more usual" levels of growth and improvement of profitability.

This year is likely to be Mr. Lévy's final full year in charge of the group, which he joined in 1971 and where he has been chairman-CEO since 1987. He plans to step down at the annual general meeting in May 2017.

Organic growth (excluding acquisitions) reached 3% in North America, 3.8% in Asia Pacific, and 3.4% in Europe, where Germany and Italy grew 10%. Latin America was the weakest region, falling 3.1%.

In digital, all regions achieved double-digit growth except North America, where "difficulties with Razorfish" were cited as the reason for a weaker performance.

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