Publicis blames "FMCG spend attrition" for slowed Q1 results

Josh McDonnell
By Josh McDonnell | 16 April 2019

Publicis Groupe has reported a 1.6% organic growth decline in its first-quarter earnings for 2019, attributing the drop to "attrition" of FMCG clients.

Asia Pacific net revenue was up 4.0% and 1.2% on an organic basis, however, Australia fell into an organic growth bracket of less than 0%, alongside US, China and Germany.

Despite the decline in organic growth, Publicis Groupe’s net revenues in Q1 2019 were 2,118 million Euros, up 1.7% from 2,082 million Euros in the same period 2018.

North America net revenue in Q1 2019 was broadly flat on a reported basis but posted a decline of 4.3% organically, mainly caused by a decline in traditional advertising a "handful of media losses".

Publicis Groupe chairman and CEO Arthur Sadoun says the revenue results were in line with the company's expectations, confirming its expectations for the rest of the year.

"The Publicis Groupe will be stronger, with a balanced revenue mix across diversified expertise. We will be in a position to grasp a larger share of the marketing and business transformation market, which will significantly expand our growth opportunities," Sadoun says.

He adds that the holding group will continue to focus on its "transformative path", believing that the pace of attrition from clients will slow in the second half of the year.

"The retention of our clients also recorded a marked improvement. This is helping us to mitigate attrition that mainly comes from FMCG clients.

"We believe that the pace of attrition will slow down in the second half of 2019. We also ranked first in New Business Wins in 2018, and the largest ones are starting to ramp up in the second quarter. Taken together, these two items lead us to confirm our outlook for the year."

Yesterday the holding group also announced the acquisition of data marketing business Epsilon, for a net purchase price of US$3.95 billion.

Epsilon is currently owned by Alliance Data Systems, with Publicis saying it has plans to continue to build a strategic partnership with the parent company following the acquisition.

Publicis says the deal is part of the group's broader strategy to enhance its data-driven personalised experience offering at scale.

"This acquisition will accelerate the implementation of our strategy to become our clients’ preferred partner in their transformation," Sadoun says.

"Realized at compelling financial terms, the transaction will make us fully equipped with truly end-to-end suite solutions to address the increasingly complex needs of our clients in a fast-changing, data-driven marketing environment."

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