“With an increase in its published income and a 1.3% decline in its growth limited to 4.4%, Publicis Group shows a good resistance to severe economic crisis and publish a best qu’attendus.
Although I can not be satisfied to grow organic withdrawal, all the information in our possession are in the same direction: the decline in the market is much more pronounced than expected. Based on figures published by our major competitors down 5.6% to 6.6%, it appears clearly that we are gaining market share. The strategy over the past few years is bearing fruit: the growth of activities in digital and emerging markets has served to shock. In addition, we offer comprehensive and highly adapted to the new era that will open, confirming its success to advertisers: 1 in New Business in 2008, we maintain that position and dig away in the first quarter of 2009 and all indications are that this is the case in April. These successes are reinforced by the strengthening of relationships with our clients in all sectors. The efforts of the Group are fully geared towards four objectives: better support our customers in this difficult period, gain market share, protect our margins and consolidate the financial health of the Group. The configuration of forecasts suggesting that the low point of the reduction will be achieved in the summer and the second half of 2009 will be better than the first. The recovery to the increase expected in the summer of 2010. The most recent indicators seem to support this scenario.>>
I. income
The Group’s consolidated income rose to 1 075 million for the first quarter 2009, up 1.3% compared to the income of the first quarter of 2008.
Organic growth was down 4.4% for the quarter, down less than the decline in the market.
II. Activity 1st Quarter 2009
The strength of income and a decline in organic growth limited to the period are mainly attributable to the effects of the strategy implemented in recent years: the growth of digital activities in the United States serves as a shock to lower market and the good performance of some emerging markets like Latin America, Turkey, Central Europe or the Middle East helps to reduce the negative impact of mature economies. In Q1 2009, the advertising accounts for 38% of total income, the SAMS 41% (including 100% of digital) and the Media 21%. The digital activities alone represent 20.5% of total revenue against 17.6% in 1st quarter 2008 and 19.6% for the full year 2008 (at 2009 exchange rates).
The portfolio is well diversified. More than 50% is growing. The automotive sector shows a sharp decrease (almost 20% at constant currency) and represents 13% of income in the first quarter of 2009 against 15% for the year 2008.
Q1 Revenue by geographic area
(in millions Revenue Growth 2009/2008
euros) organic
1st 1st
Quarter Quarter
2009 2008
Europe 357 403 -6.6% -11.6%
North America 526 466 -3.6% 13.0%
Asia-Pacific 114 116 -6.3% -1.6%
Latin America 51 52 3.1% -2.1%
And Africa 27 24 3.0% 12.8%
Middle East
Total 1 075 1 061 -4.4% 1.3%
Europe recorded a decline in growth of 6.6%. Most countries – the United Kingdom (-4.9%), France (-7.4%) but especially in Southern Europe (-20.5%) – affected by the slowdown in the first quarter, stronger in March. Germany remains in positive territory (0.9%) and Central European countries enjoyed good growth (14.8%).
North America, with -3.6% growth, mainly through better resistance to digital activities. Asia-Pacific is highly penalized by Korea, Japan or Australia.
Latin America and the countries of Africa and the Middle East are growing.
In this difficult economic climate, the Group strives to maintain its profitability and financial strength. A number of measures decided upon in September 2008 as the freeze on recruitment, with targeted adjustment shall be maintained in 2009. The focus on managing operating costs, development operations optimization as simplifications of structures, “common roof” ( “multi-doors”), the consolidation of CSP (Service Centers shared) as “Americas>> bear fruit in the year 2009 and especially in a full year in 2010.
The implementation of an ERP at the Group was launched early this year.
- Net debt at 31 March 2009
On 19 January 2009, Publicis Groupe has purchased 12.7% of the original amount of the Oceane 2018 (Oceane Publicis Groupe SA FR0000180127-2018-2,75%) for a total of 95 million.
At 31 March 2009 net debt stood at 1 097 million against EUR 1 077 million at 31 March 2008.
- New Business: 1.7 billion of net gains
Despite a marked wait advertisers, Publicis Groupe garnered 1.7 billion U.S. dollars of net New Business in Q1, demonstrating the dynamism of the teams and the relevance of its offer. This performance, Publicis Group in front of the pack in terms of budget savings for the first three months of the year (ranking Nomura).
April looks very good with the conquest of the budget HP-PCS (Personal Computers-for Europe, the Middle East and Africa) and confirmation of the successful Shanghai Expo in 2010, Visa in 2012 and Siemens (China).
III. HIGHLIGHTS OF FIRST QUARTER 2009
- Employee share ownership
Pursuant to authorization voted by the Annual General Meeting of 3 June 2008 (23rd resolution), the Management Board of Publicis Groupe, after obtaining the prior consent of the Supervisory Board, decided to further involve staff development Group.
First, the Executive Board, approved by the Supervisory Board, decided the allocation of 50 shares in the first half of 2009 to each of the 4 500 employees working in France in subsidiaries held more than 50%. These shares are allocated without performance conditions, but subject to minimum length of three months and presence for a period of two years from the date of grant.
This bonus program in France is the first step in a broader program of employee ownership which will gradually all Group employees in countries where it has a significant presence. This plan will be implemented over the next two years because of the diversity of legal and fiscal regimes of the countries where the Group operates.
Secondly, a co-investment has been proposed to nearly 160 key leaders of the Group, allowing them to subscribe to a program of investment in Publicis Groupe shares.
This program is based on a personal investment in Publicis Groupe shares through a dedicated commitment of key leaders. It is accompanied by an incentive to fidelity and performance of the Group. Leaders-investors will receive, subject to conditions, after three or four years of presence, according to the laws of country, loyalty bonus shares. In addition and subject to the performance of Publicis Groupe compared to its peers in terms of organic growth and operating margin, leaders investors will receive shares of performance.
As members of the Management Board – leaders officers – the bonus share issue were decided in accordance with the recommendations AFEP / MEDEF October 2008. Accordingly, they will receive shares of that performance related only to performance by the Group both in the growth margin compared to its peers. The rules of attendance and detention are the same for all.
In bringing together the widest employees and by creating this system of co-investment and incentives, the Group intends to make a strong testimony to all those who are the real stakeholders in its success. The Group also wishes to encourage its employees to provide its customers the most innovative, most creative and most efficient. The group also wants to encourage its employees to work towards its development, both through the conquest of new budgets and the consolidation of its margins in the long term in order to preserve the culture and independence of Publicis Groupe.
- External growth in Q1 2009
Beginning in April, Publicis Groupe has acquired the Nemos, the lead agency in interactive communication in Switzerland. Founded in 2002, Nemos, based in Zurich, is one of the best agencies in flash programming and multimedia. With ten experts in digital, it’s customers include Carlsberg, Mövenpick and Condor Films.
This transaction is another demonstration of Publicis Groupe continuously enrich its digital offerings with targeted acquisitions in this sector.
IV. PERSPECTIVES
The most recent forecasts from ZenithOptimedia show a contraction in advertising spending worldwide by 6.9% severely affecting the media while the analog digital continues to grow.
These latest forecasts should be read in light of projected year-end ranged decay of global advertising spending to 0.2%. They reflect the unprecedented downturn in the global economy. Other market indicators, although slightly less negative are in the same direction.
In this context, Publicis Group, with its strategic choices, increased attention to managing costs in a concern to protect its margins and financial position.
The conquest of new budgets for a net $ 1.7 billion attest to the relevance of the supply of Publicis Groupe and dynamism of its teams around the world. The objective of gains in market share is a priority of the Group come true.
Next General Assembly: 9 June 2009 at 10am at Publiciscinémas
About Publicis Groupe
The 4th global communication, the second global consulting and media buying as well as the world leader in digital communication and health. The Group is present in 104 countries on 5 continents and has approximately 45 000 employees.
The supply of communication services of the Group, with clients both local and international, includes advertising, through three global advertising networks, Leo Burnett, Publicis and Saatchi & Saatchi and two multi-hub: Fallon and Bartle Bogle Hegarty (49% owned subsidiary). Advice and buying media is available through two worldwide networks: Starcom MediaVest Group and ZenithOptimedia; and expertise in digital and interactive communications through Digitas network in particular. Publicis Group has recently launched VivaKi to take advantage of synergies of operations independent of Digitas, Starcom MediaVest Group, ZenithOptimedia and Denuo. This entity will develop new services and tools, digital platforms and next generation. The Group offer also includes marketing services and specialized communication, such as health communication, communication corporate and financial public relations, direct and relationship marketing, event communications, sports, and ethnic communication.
<