Publicis identify Australia as APAC's weak link in annual results

Josh McDonnell
By Josh McDonnell | 7 February 2019
Publicis' Sydney HQ

Australia has been identified as one of Publicis Groupe's most underperforming markets in the APAC region according to its latest annual results for 2018.

Asia Pacific reported growth of -10.9% and organic growth of -1.8%. Most of this negative performance was due to Australia (-4.7%), which was affected in the first half-year by the non-renewal by Qantas of its call center management contract.

Locally, Publicis Media also lost one of its biggest accounts in Suncorp last year. Worth $70m in annual billings, Publicis Media had only recently set up a bespoke Power of One model to service the brand in 2017.

Despite the revenue loss and struggling local business, the group was able to recover from its 10.8% decline in revenue that it recorded for Australia in is half-yearly results in 2018, taking it to 4.7%.

Publicis Groupe's global net revenue for the full year 2018 was €8,969 million ($14.3bn AUD), compared with €9,332 million ($14.9bn AUD) in 2017, a 3.9% decrease.

At constant exchange rates, growth was +0.1% but the actual impact of exchange rate variations was a negative 4.0% or €374 million ($598m AUD). Net acquisitions contributed €5 million ($8m AUD) to net revenue in 2018.

In 2018, Publicis Groupe CEO and chairman Arthur Sadoun said Publicis Health Solutions division was “under strategic review”, adding that it was a low-margin and highly volatile business.

As a result, Publicis Groupe made effective the "disposal" of Publicis Health Services in January 2019, however, the business stated it remained determined to provide its clients with the "best possible offering" for their digital transformation, which requires investment in healthcare-related consulting, data and technology.

"We have the financial robustness, the model to win in the future and a clear roadmap for the next steps of our journey. We now need to deliver strong and profitable organic growth," Sadoun said.

"In this challenging context, we are making the demonstration that we have built the model of the future and are highly competitive while working to create more value for our shareholders."

Restructuring costs stood at €104 million ($166m AUD) in 2018, which was down from €120 million in 2017($191m AUD) as the groupe reorganizes around The Power of One which increasingly integrates structures and activities.

The Australian business also underwent significant leadership changes earlier this year, with Publicis Media CEO Matt James relocating to the UK, taking on the global leadership role for Zenith, while Michael Rebelo was named Publicis Groupe CEO.

Late last year both Rebelo and James spoke with AdNews, to break down the function of the model and the impact it would have of the holding group here in Australia.

Major global account wins for the media side of the business during the recorded financial year included the appointment to the Campbell Arnott's and GlaxoSmithKline accounts.

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