Strong Finish to 2014 Helps Publicis Groupe Results

'What Really Matters Is Not So Much What Happened, as What Is About to Happen'

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Maurice Levy
Maurice Levy

Revenue at Publicis Groupe, the world's third largest agency holding group, grew 4.3% last year to $8.2 billion, according to the company.

Organic growth excluding certain events such as acquisitions was slower, however, at 2% for the year. That's still better than the French communications group had forecast, thanks to accelerated year-over-year growth of 3.2% in the fourth quarter, it said.

Digital work accounted for 41.9% of the group's revenue and grew by 7.3% over the year, while more traditional revenue declined 1.4%.

Publicis Groupe agencies include Leo Burnett, Saatchi & Saatchi, Bartle Bogle Hegarty, Starcom MediaVest Group and ZenithOptimedia.

Maurice Lévy, chairman and CEO of Publicis Groupe, admitted at an investor presentation in Paris this morning that last year's failed merger with Omnicom Group had been a distraction. He predicted that 2015 would be a "slightly slack" year, but added, "Publicis is back. We will outperform the market in 2016."

Asked why there was such a gap between the performances of Publicis Groupe and Omnicom Group -- which yesterday reported revenues up 5% to $15.3 billion -- Mr. Lévy responded, "Omnicom's figures show that growth was stronger, whereas we were hurting. A major part of some of our competitors' growth is driven by markets where we are not represented; field marketing for instance was behind very much of the growth registered by Omnicom."

Mr. Lévy was keen to move on from mention of the failed merger, insisting, "What really matters is not so much what happened, as what is about to happen."

Asked whether a focus on mergers and acquisition was detrimental to organic growth at the company, Mr. Lévy demurred, saying he couldn't provide an off-the-cuff answer.

The Publicis Groupe leader was at pains to point out the long-term value of the company's $3.7 billion Sapient acquisition, which it completed Feb. 6, and said his task now is to introduce Sapient to clients in France, where he said it is less known.

Mr. Lévy made special mention of the good performances of healthcare, media and its Bartle Bogle Hegarty agency.

The group's 2014 results were boosted by emerging markets, which contributed significantly to that improved organic growth toward the end of the year, with fourth-quarter revenue up 7% in Brazil, 8.5% in Russia, 30% in India and 8.4% in China and Taiwan.

Mr. Lévy also nodded toward the improving U.S. economy. "We talk a lot about emerging economies, but the real emerging economy is that of the U.S., where we have a pocket of growth," he added. "There are several reassuring and positive indicators around construction, innovation and practically full employment." North American revenue increased 16.3% in the fourth quarter, although organic growth was a more modest 2.4%.

2014 revenue in North America increased 5.7%, ahead of BRIC (Brazil, Russia, India and China) and MISSAT (Mexico, Indonesia, Singapore, South Africa, Turkey) at 2.2%, Europe at 4.6%, and the rest of the world at 0.1%.

Organic growth followed a different pattern, with North America up 2.3%, BRIC and MISSAT up 3.5%, Europe down 0.6% and the rest of the world up 6.7%.

Europe was described as "patchy" by Mr. Lévy, who said, "The southern countries are still desperately fighting debt.... The north is rather better, with job-generating growth, and low unemployment rates."

Last year Publicis Groupe expanded its management team as it prepares for the next wave of leadership, making six additions to the executive committee, including Razorfish Global CEO Tom Adamski, Saatchi & Saatchi Worldwide CEO Robert Senior and Leo Burnett Worldwide CCO Mark Tutssel.

Publicis Groupe also created the Directoire+, an enlarged management board which gives more access to decision-making for the next generation of management, including Starcom MediaVest Group CEO Laura Desmond, ZenithOptimedia CEO Steve King, Publicis Worldwide CEO Arthur Sadoun, and of Publicis Groupe Chief Strategist Rishad Tobaccowala.

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CORRECTION: An earlier version of this article said Tom Adamski was CEO of Rosetta. Mr. Adamski was promoted to CEO of Razorfish Global, a group that includes Rosetta, last fall.

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