EuroBusiness Media (EBM): Publicis Groupe, the world’s third largest communications group, has just released its Q1 revenue numbers. I’m here to discuss them now with CEO, Maurice Lévy. Mr. Lévy, it’s a pleasure to see you.
Maurice Lévy: Bonjour, it’s my pleasure also to see you again.
EBM: Now, a lot of change since we first met. You have just released those Q1 numbers, you’ve got better than expected organic growth. What would you say are the key highlights and where did that improved expected performance come from?
Maurice Lévy: First, it’s real that our numbers are well above our own expectations. This is due to many factors. The first one is the fact that we won a few accounts at the end of last year that are generating revenue in Q1, so that’s a nice thing to have. So organic growth it’s at 2.9% thanks to this. The second is that we have most of our operations which are doing extremely well. This is the case for Publicis Media, for Publicis Health and the good news is that Sapient has delivered a higher than 10% organic growth for the first quarter. When you put all this together you have a number which is up by 8.9% compared to last year. There is also some other good news, particularly the fact that many countries have contributed to the growth. It’s the case in Europe with Spain which is positive –not very much but positive – Italy which is back to growth, Germany with a very nice growth, UK with a small decline but stabilising and France with a nice growth. India is very good, China has also delivered good growth, this is the case for the US, for Russia and for many other countries. The only big concern that we have is the issue of Brazil and some other smallish countries which are showing some decline. This is the case for Mexico, it’s the case for a few countries, Israel, Egypt but all in all we had a very good Q1.
EBM: Of course, an increase in organic growth is encouraging. You caution though that you are still expecting modest increases in organic growth for full 2016. Which headwinds do you anticipate will weigh on growth this year?
Maurice Lévy: If you look back at the end of last year, we have been hit by a few losses and this was the famous Media palooza, so we are expecting a headwind of 1.5% for the full year. If the first quarter has been impacted lightly, we expect that the second and the third quarter will be more impacted than the first. All in all, we are still expecting a pretty good year in total, with a nice increase of all our financial indicators, starting obviously with revenues, but also with earnings per share as well as the net profit.
EBM: A lot of outside factors can have an impact on result. What is your outlook today on the global economy and its impact on your business? Do you think that events like the Olympics and the US Presidential elections could have an impact on the business?
Maurice Lévy: The US Presidential elections impact has no impact for us. It has a nice impact for the media because they are using a lot of media and this is good for the media because they are selling a lot of ads, but we, the advertising agencies and particularly we Publicis, we don’t work for any political party, so therefore this has zero impact on our numbers. Regarding the Olympic Games, normally this represents roughly 100 basis points of growth, sometimes people expect it to be 120, but as this is happening in Brazil I’m afraid that we should have something which is below what we are getting in normal days.
EBM: Last year you announced a major reorganisation. A lot is riding on the successful completion of that plan including achieving higher organic growth. How is that organisation progressing and how are your clients reacting?
Maurice Lévy: We are transforming ourselves in a way that has never been seen before in the advertising world. It is a true transformation of our business. This is due to the fact that the digitisation of the world has a huge impact on our clients, the need to transform themselves and in order to best serve them, we need to transform ourselves. This is what we are doing. By the way, something which is extremely important is that we have 55% of our revenue which is now derived from Digital, so we had to change the way we are operating. There is no longer a holding company; we are an operating company, a connecting company which is using all its assets at the service of our clients, with four major solution hubs and a Publicis one for the smaller countries. All the implementation is doing extremely well and we are perfectly on timing. It is a mystery how this has worked well and there is very few things that we have to do and as we indicated already, everything will be up and running by the end of June. In the meantime, we have already presented our solutions and our new organisation to our clients. And the results are tremendous. They are all very excited because we are the only ones to offer today an end-to-end solution which encompasses from consulting to the deployment of the ads through the whole creative process. So be it on technology or be it just on offline we are offering and end-to-end solution to our clients and they love it.
EBM: So the returns have been quite positive then?
Maurice Lévy: So far yes, and we expect that this will drive a lot of growth and more importantly than driving growth, it will help us to become the best partner for our clients, helping them to move to the next level.
EBM: You mentioned the number of 55% of revenue now in Digital. When do you expect organic growth will return to sector average?
Maurice Lévy: We had a growth in the first quarter on Digital which is 7.6% organic growth with 55% of our revenue. This shows clearly that the 45% has a negative impact. So we are continuing to drive more digital operations in order to increase our digital contribution to the whole growth. We expect that in 2017 not only will we be aligned with our competitors but we will certainly surpass most of them.
EBM: Maurice Lévy, thank you very much.
Maurice Lévy: Thank you.
