Publicis Groupe has reported a decline in year-on-year revenue in the first half of 2018, but an improvement in its operating profit margin.
The communications group reported half yearly net revenue of €4.28 billion (A$6.77 billion), down 8.2% in US dollar terms on H1 2017. Part of the reason for the drop in revenue is the effect of currency exchange fluctuations. When constant exchange rates are measured, the drop in net revenue is only 0.5%.
A highlight for the group is that it has improved its operating margin by 5.6% to €611 million – an operating margin rate of 14.3%.
Publicis said the negative results were largely attributable to Australia’s revenue dropping 10.8% following the loss of the Qantas call centre contract. The APAC region was the worst performing for Publicis.
It also said the slowdown was due to uncertainty relating to the implementation of the EU’s sweeping new data regime, and “an operational bump” in its health sales representatives business in the US. See: GDPR: what is it and what do I do?
Chairman and CEO Arthur Sadoun said Publicis Health Solutions was “under strategic review”, adding that it was a low-margin and highly volatile business.
“This bump represents the biggest share of our negative growth as the overall impact of our Publicis Health business was around €30 million," he said.
“Overall, our first half financial results, combined with our impressive new business wins that will start ramping up in the second half, make us confident to deliver our full year objective of improving growth and margin versus 2017.”
Sadoun said it has been a strong period for the group globally in term of new business wins. This includes Daimler, Campbell's, Marriott, McDonald’s, Macy’s and Nestlé.
“The momentum is continuing in Q3, and only last week, we announced the wins of Lenovo media globally, P&G Shopper in the UK and Nestlé in the US,” he added.
As a result of the announcement, shares down fell almost 9% and also impacted the stares for WPP and Omnicom slightly.
Publicis Groupe is the second agency company this week to report disappointing financial results with Omnicom all missing its targets.
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