‘Confident’ Publicis shrugs off global jitters with 10.5% growth in Q1

Publicis Groupe shrugged off global jitters, including the war in Ukraine and the rise in inflation, as revenues grew 10.5% on an organic basis to hit €2.8bn in Q1.

All regions showed growth, with the US up 8%, Europe 14.9% and Asia 14.4%.

The French agency group, the first of the big six global groups to report quarterly figures, said its Q1 performance was “well above expectations” and described it as a “very strong start to the year”.

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It follows 2.8% growth in Q1 in 2021 and a 2.9% decline in the same period in 2020 at the start of the pandemic.

Publicis Groupe has a “Power of One” strategy that combines data, creative, media and technology, and it credited “the strength of the model” for helping to win business, including a series of big media wins such as AB InBev globally, LVMH in the UK and France and PepsiCo in China.

Arthur Sadoun, the chief executive of Publicis Groupe, said: “Our model is going from strength to strength, as it continues to capture rising client demand for first-party data, digital media and commerce. This is particularly true in business transformation, where Publicis Sapient saw strong acceleration this quarter and grew 18% globally.”

Q2 2022 should also be strong with 5% growth – on top of 17.1% growth in the same quarter a year ago.

Publicis Groupe is sticking with its full-year growth forecast, which is now at the top end of its previous prediction of between 4% and 5%.

Sadoun said: “We are confident in our ability to deliver on all of the objectives we set for the year and actually come in at the upper end of our organic growth target, despite the uncertainty caused by the global health situation, the evolution of the conflict in Ukraine and the consequences of inflation for our clients.”

However, the company did not upgrade its expectations, despite its good Q1 showing, because of the risk of uncertainty in the second half of the year.

“While this should have led the Groupe to upgrade its expectations for 2022 organic growth, the global health situation, the evolution of the conflict in Ukraine, and the consequences of inflation for the clients, create too much uncertainty to do so at this stage,” the company told investors.

Publicis Groupe reported an €87m one-off loss from the disposal of its 1,200-strong Russian operation after passing control to local management and exiting the country in March, following the start of the conflict in Ukraine.

Fears about the war and the wider impact of economic sanctions on Russia have knocked investor confidence since Russia’s invasion on 24 February.

Publicis Groupe’s share price hit a high of €66.8 at the start of February, following its annual results, but tumbled after the conflict began and briefly fell below €50 in early March.

Analyst reaction

Goldman Sachs said: “This further validates in our view the strength of Publicis’s model and the company’s increased ability to capture growing client demand in the areas of data, digital media and commerce.”

Bernstein said: “While Publicis has benefitted from strong recent client wins, the growth resilience bodes well for the other marketing comms groups yet to report.” The investment bank noted that while there have been some “investor concerns” about whether the agency sector can hit its growth targets in 2022, it is “so far so good” on the basis of Publicis Groupe’s Q1 performance.