Arthur Sadoun: Publicis Sapient hit by client cuts in UK

The chief executive of Publicis Groupe said its media and creative businesses in the UK 'have been growing' after reporting global organic growth of 2.8% in Q1 2021.

Sadoun: again denied reports of merger talks for Publicis Groupe
Sadoun: again denied reports of merger talks for Publicis Groupe

Publicis Groupe has reported a “solid” organic revenue growth of 2.8% between January and March 2021, driven by the US and Asia.

Net revenue across the company was €2.4bn (£2.1bn), a decline of 3.6% on a reported basis. In Europe, which includes the UK’s contribution, net revenue was €561m, an organic revenue decline of 1.8% and a fall of 2.9% on a reported basis.

In the UK, organic revenue declined by 3.4%, which Publicis Groupe attributed to ongoing government restrictions continuing to weigh on its operations. In contrast to the picture in the US where Publicis Sapient grew by 11.2%, the digital transformation company was hit by client cuts in the UK.

Arthur Sadoun, chief executive of Publicis Groupe, said: “Publicis in the UK has really been a story of two tales in Q1. On one side, our media and creative activities have been growing.  

“On the other, Publicis Sapient has been impacted by scope reductions mainly due to Capex [capital expenditures] cuts at some of our biggest clients. But we are confident that the UK will have a good year, as our transformation is well underway.”

In contrast to the UK, and despite being “late on vaccines”, France and Germany reported organic revenue growth of 4.9% and 6% respectively (when the French outdoor business and Drugstore are excluded), which Sadoun said was “good news”.

Publicis Groupe generated revenue of €1.5bn in North America in the first three months of 2021, which represented organic revenue growth of 4.7%, though on a reported basis that was down 3.2% as a result of changes to the US dollar exchange rate.

Sadoun said he was surprised by the “sharp increase” in the demand from group clients in commerce in the January to March period. He continued: “We were expecting it, but not at this level. Having Sapient growing for the second quarter in a row in the US was a good surprise.

“The reorganisation we have put in place there at the end of 2019 made us confident that we would have good traction this year, as the pipeline has been picking up since Q3 2020.

“But this kind of exponential growth shows how much commerce is at the forefront of every clients’ approach, and how well we are positioned to meet that with Sapient.”

Two years after its “audacious move” to buy Epsilon in a $3.95bn deal, Sadoun said the data analytics company places Publicis Groupe as an “indisputable leader in personalisation at scale, and brings our clients a huge competitive advantage”.

He said: “Epsilon has been instrumental in our new business performance, making the difference in a lot of our client strategies. The evidence of that is the overall growth we are experiencing at the moment, with a huge acceleration on the international front, that is growing by 25% in Q1.”  

Publicis Groupe said it expected to recover “between 60% to 80% of what it lost in Q2 2020” in Q2 2021, which would translate to organic growth of between 8% and 10%, but warned the crisis is not over yet and said it was not able to provide guidance for the full year because of “limited visibility”.

Publicis Groupe shares rose last month after French business news service BFMTV reported there had been talks between it and Havas-owned Vivendi.

When asked about M&A speculation, Sadoun said: “These rumours are unfounded. We have denied them firmly and immediately. Let’s be clear, people can always speculate and spread rumours. But if there is one thing that is an essential part of Publicis’ DNA, it is our independence.”

In January Publicis Groupe declined to comment for Campaign’s story that there had been talks between it and a private equity investor but the group subsequently issued a statement denying talks were “going on”.

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