First Quarter 2021 Revenue
- Returning to growth in Q1 in a challenging
environment
April 15, 2021
- Solid organic growth of +2.8% in Q1, thanks to our
transformation
- U.S. positive for the second quarter in a row at +5.1%
organic, with:
- Publicis Sapient at +11.2%
- Mid-single digit growth for Epsilon for the 2nd
consecutive quarter, at +4.7%
- Double-digit growth in digital media
- Acceleration of organic growth in Asia at +5.7%, +3.0%
in China
- Sequential improvement in Europe at -1.8% (+2.8%
excluding MediaTransports and the Drugstore)
- Uncertainties remain due to still evolving sanitary
conditions
Q1 2021
|
|
§
2021 Net revenue |
€2,392m |
§ 2020 Net
revenue |
€2,481m |
§
Organic growth |
+2.8% |
§ Growth at
constant currencies |
+2.7% |
§ Reported
growth |
-3.6% |
|
|
Arthur Sadoun, Chairman and CEO of Publicis
Groupe:
“In an environment that remains challenging,
Publicis Groupe is returning to positive organic growth. Thanks to
the effects of our transformation, we posted a solid +2.8% in Q1,
ahead of expectations.
This performance is mainly driven by the U.S.
and Asia, which already outperformed all of our competitors in
2020.
Our U.S. operations were positive for the second
quarter in a row, with +5.1% organic growth. We continued to
capture a disproportionate amount of the shift in client investment
towards digital channels, e-commerce and DTC, as demonstrated in
the acceleration of Publicis Sapient’s U.S growth at +11.2%. It is
also visible with Epsilon, posting mid-single digit growth for the
second consecutive quarter, at +4.7%.
In Asia, we reported an acceleration in organic
growth of +5.7% for Q1. China returned to growth at +3.0%, as it
began to benefit from a strong series of wins over the past 18
months.
Europe meanwhile is showing sequential
improvement, with a performance that was slightly down in Q1 at
-1.8%. Excluding Mediatransports, and The Drugstore, on the
Champs-Elysées, organic growth in Europe was at +2.8%. Some
countries like France and Germany are returning to growth, but
ongoing lockdowns weighed on some of our operations.
On the new business front, Q1 has been very
busy, with some structural wins like L’Oréal Media business in
China, Infinity’s global creative, AB Inbev’s data business,
Toyota’s entire advertising portfolio in Australia, Unilever
Shopper Marketing and Samsung media in the U.S.
For the rest of the year, we will continue to
focus on our main priorities: putting our people first by
safeguarding their health and wellbeing; staying close to our
clients, who are under pressure to reinvent their business model;
and accelerating on our product roadmap, which is advancing well,
as demonstrated by our recent partnership with The Trade Desk.
Of course, returning to growth earlier than
expected raises even further the confidence we have in our model,
and I would like to thank our people for their incredible efforts
and our clients for their trust. Nonetheless, we remain cautious in
what is a still very challenging environment.”
* *
*
NET REVENUE IN Q1 2021
Publicis Groupe’s net revenue in Q1 2021 was
2,392 million euros, down by 3.6% from 2,481 million euros in 2020.
Exchange rates had a negative impact of 151 million euros.
Acquisitions, net of disposals, accounted for a decrease in net
revenue of 3 million euros. Organic growth stood at +2.8%, a solid
number supported by the performance in the U.S.
Breakdown of Q1 2021 Net revenue by
region
EUR |
Net revenue |
Reported |
Organic |
million |
Q1 2021 |
Q1 2020 |
Growth |
Growth |
North America |
1,505 |
1,555 |
-3.2% |
+4.7% |
Europe |
561 |
578 |
-2.9% |
-1.8% |
Asia Pacific |
217 |
219 |
-0.9% |
+5.7% |
Middle East & Africa |
62 |
75 |
-17.3% |
-11.0% |
Latin
America |
47 |
54 |
-13.0% |
+7.7% |
Total |
2,392 |
2,481 |
-3.6% |
+2.8% |
North America net revenue was up by 4.7% on an
organic basis in Q1 2021, down by 3.2% reported due to the US
dollar exchange rate. This includes a solid performance in the
U.S., up by 5.1% on an organic basis, demonstrating further
sequential improvement and positive for the second quarter in a
row. This is the result of a faster than expected economic recovery
in the country, combined with the strength of the Groupe’s model
that allowed to capture the shift in client investment towards
digital, e-commerce and direct-to-consumer. Publicis Sapient was up
by 11.2%, benefitting from the encouraging pipeline that started to
pick up in Q3 2020. Epsilon recorded a +4.7% growth, driven by
digital media, data practice, as well as recovery in automotive and
further cross-fertilization with existing Groupe’s clients. Outside
Epsilon, digital media activities were up double digit, supporting
the growth of Media overall. Creative was broadly flat and Health
activities were up double digit for the fourth consecutive quarter.
Canada was down 4.4% organically.
Net revenue in Europe was down by 2.9% on a
reported basis. It was down by 1.8% on an organic basis, but it is
worth mentioning that excluding the French outdoor media activities
and the Drugstore, Europe was up by 2.8% on an organic basis. Some
countries like France and Germany returned to organic growth, at
+4.9% (excluding MediaTransports and the Drugstore) and +6.0%
respectively. But ongoing government restrictions in the region
continued to weigh on some of our largest operations, like in the
UK, which declined organically by -3.4%.
Net revenue in Asia Pacific was down by 0.9% on
a reported basis, but returned to positive on an organic basis at
+5.7%. China, which was the first country impacted by the Covid-19
pandemic in 2020, posted an organic growth of +3.0% thanks to a
better sanitary context and strong series of wins. India and
Australia both recorded dynamic organic growth in Q1.
Middle East & Africa declined by 17.3% in
net revenue, or -11.0% on an organic basis, remaining impacted by
the sanitary situation and impacted by a particularly high
comparison base for Publicis Sapient.
Net revenue in Latin America was down by 13.0%
on a reported basis due to currency impact, it was up by 7.7% on an
organic basis. Brazil was broadly flat, while Mexico, Argentina and
Columbia saw an increase in organic growth.
Breakdown of net revenue at March
31, 2021 by sector
On the basis of 2,984 clients representing 92% of
net revenue
NET DEBT AND LIQUIDITY
Net debt totaled 1,866 million euros at the end
of March 2021, compared with 833 million euros at year-end 2020,
reflecting the seasonality in the activity. Net debt was 4,094
million euros at the end of March 2020.
The Groupe’s average net debt stood at 1,497
million euros in the first quarter 2021, compared to 3,486 million
euros in the first quarter 2020.
The Groupe’s liquidity position remains very
solid, at 5.1 billion euros, improving by around 400 million euros
compared to 4.7 billion euros a year ago.
Furthermore, following the merger of MMS USA
Investments Inc. into MMS USA Holdings Inc. that took place on
March 31st 2021, MMS USA Holdings Inc. is the new issuer of the
2025 (FR0013425139), 2028 (FR0013425147), et 2031 (FR0013425154)
eurobonds.
ACQUISITIONS AND DISPOSALS
There were no significant transaction on the
period.
OUTLOOK
The first quarter demonstrated a better than
expected start of the year. As far as Q2 is concerned, the Groupe
expects to recover between 60% to 80% of what it lost in Q2 2020,
implying an organic growth between 8% and 10%, assuming no further
deterioration in sanitary conditions. The crisis is not over yet,
and a limited visibility continues to prevent the Groupe from
giving a full year revenue guidance for 2021. As announced at the
Full Year 2020 results, the Groupe will update further in July at
its Half Year 2021 results, when the visibility on the economic and
sanitary situation will have improved.
In the meantime, the Groupe will continue to
manage its cost base and its cash tightly while preserving its
agility and investing in future growth, providing confidence in
delivering on the margin and cash objectives set for the year.
The Groupe confirms that its operating margin
rate will improve by up to 50 basis points in 2021, consolidating
further the achievement of 2020.
The Groupe also confirms that its free cash flow
before change in working capital should be around 1.2 billion euros
in 2021, contributing to the Groupe’s deleveraging plans.
NEW BUSINESS
EUROPE
Pandora AS (Technology), Polestar Performance AB
(Technology), Nomad Foods (Media), La Poste (Creative), Société des
Produits Nestlé (Technology), Daimler (Technology), Unilever
(Technology), PMU (Technology), TUI Group (Creative), Groupe Casino
(Creative), SNCF (Creative), FNPCA - ARTISANAT (Creative), Procter
& Gamble (Creative), Etihad Airways (Media), Sephora (Data),
April (Technology), ABBVIE (Creative), France Télévisions (Data),
Izneo (Media), Enedis (Creative), G-Star (Creative), Zava
(Technology), Comic Relief (Creative), Brown Forman (Media), Vinted
(Media), DocMorris N.V. (Media), Reckitt Benckiser (Media)
NORTH AMERICA
Loblaw Digital (Technology), Verizon Wireless
Digital (Technology), Mercedes-Benz USA (Technology), National
Cancer Institute (Technology), Academy Sports & Outdoors
(Technology), Comcast Corporation (Technology), The Depository
Trust & Clearing Corp (Technology), Fiat Chrysler Automobiles
(Technology), Sally Beauty (Media), Inspire Brands (Media), Samsung
(Creative), Alcohol and Gaming Commission of Ontario (Creative),
Unilever (Creative), Procter & Gamble (Creative), Hut 8 Bitcoin
Mining (Creative), Mercedes-Benz (Creative), MacDonald, Dettwiler
and Associates Inc (Creative)
ASIA PACIFIC/MEA
Garena Online (Creative), PRC - Martell
(Creative), L'Oréal (Media & Creative), Yili (Creative), Yinlu
(Creative), Capital Foods (Creative), Diageo (Creative), Yinlu
(Creative), Others (Creative), Ecco (Creative), AXA (Creative),
Samsung (Digital), Penang South Island (Power of One), Spotify
(Creative), AMC (Creative), Mercedes-Benz (Creative), Nestle
Content (Production), Medgulf (Creative), Essilor (Creative),
Nestlé (Wyeth) (Power of One), Sephora (Creative), Toyota Motor
Corporation (Creative & Media)
LATAM
Grupo SURA (Data), Banco Bradesco (Creative),
Citigroup (Production), Pfizer (Creative), Astrazeneca (Creative),
Compania Nacional de Chocolates de Peru S.A. (Creative), Visa
(Creative), Grupo Nutresa (Creative), Mercedes-Benz (Creative),
Heineken (Creative), PepsiCo (Digital), Grupo Bimbo (Creative),
Procter & Gamble (Creative & Data)
GLOBAL
AB InBev (Data), Nissan Motor Corporation –
Infiniti (Creative)
*
*
*
Disclaimer
Certain information contained in this document,
other than historical information, may constitute forward-looking
statements or unaudited financial forecasts. These
forward-looking statements and forecasts are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected. These forward-looking statements and
forecasts are presented at the date of this document and, other
than as required by applicable law, Publicis Groupe does not assume
any obligation to update them to reflect new information or events
or for any other reason. Publicis Groupe urges you to carefully
consider the risk factors that may affect its business, as set out
in the Universal Registration Document filed with the French
Autorité des Marchés Financiers (AMF) and which is available on the
website of Publicis Groupe (www.publicisgroupe.com), including an
unfavorable economic climate, a highly competitive industry,
risks associated with the confidentiality of personal data, the
Groupe’s business dependence on its management and employees, risks
associated with mergers and acquisitions, risks of IT system
failures and cybercrime, the possibility that our clients could
seek to terminate their contracts with us on short notice, risks
associated with the reorganization of the Groupe, risks of
litigation, governmental, legal and arbitration proceedings, risks
associated with the Groupe’s financial rating and exposure to
liquidity risks.
About Publicis Groupe - The Power of
OnePublicis Groupe [Euronext Paris FR0000130577, CAC 40]
is a global leader in communication. The Groupe is positioned at
every step of the value chain, from consulting to execution,
combining marketing transformation and digital business
transformation. Publicis Groupe is a privileged partner in its
clients’ transformation to enhance personalization at scale. The
Groupe relies on ten expertise concentrated within four main
activities: Communication, Media, Data and Technology. Through a
unified and fluid organization, its clients have a facilitated
access to all its expertise in every market. Present in over 100
countries, Publicis Groupe employs around 80,000 professionals.
www.publicisgroupe.com | Twitter:@PublicisGroupe | Facebook |
LinkedIn | YouTube | Viva la Difference!
ContactsPublicis
Groupe |
|
Delphine StrickerAlessandra Girolami |
Corporate CommunicationsInvestor Relations |
+ 33 (0)6 38 81 40 00+ 33 (0)1 44 43 77 88 |
delphine.stricker@publicisgroupe.comalessandra.girolami@publicisgroupe.com |
Brice Paris |
Investor Relations |
+ 33 (0)1 44 43 79 26 |
brice.paris@publicisgroupe.com |
Appendices
Net revenue: organic growth
calculation
(million euro) |
Q1 |
|
Impact of currency at end March 2021
(million euro) |
2020 net revenue |
2,481 |
|
GBP (2) |
(2) |
Currency impact (2) |
(151) |
|
USD (2) |
(122) |
2020 net revenue at 2021 exchange rates (a) |
2,330 |
|
Others |
(27) |
2021 net revenue before acquisition impact (b) |
2,395 |
|
Total |
(151) |
Net revenue from acquisitions (1) |
(3) |
|
|
2021 net revenue |
2,392 |
|
|
Organic growth (b/a) |
+2.8% |
|
|
(1) Acquisitions (Octopus UK, Third Horizon), net of
disposals (PC Epsilon Fitness, Sirius, Found)
(2) EUR = USD 1.199 on average in Q1 2021 vs. USD 1.102 on
average in Q1 2020 EUR = GBP 0.870 on average
in Q1 2021 vs. GBP 0.861 on average in Q1 2020
Definitions
Net revenue: Revenue less
pass-through costs which comprise amount paid to external suppliers
engaged to perform a project and charged directly to clients. Those
costs are mainly production & media costs and out of pocket
expenses.
Organic growth: Change in net
revenue excluding the impact of acquisitions, disposals and
currencies.
Net Debt (or financial net
debt): Sum of long and short financial debt and associated
derivatives, net of treasury and cash equivalents excluding lease
liability since 1st January 2018.
Average net debt: Average of
monthly net debt at end of each month.
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