(News Bulletin 247) – The advertising group recorded like-for-like growth of 7.1% in the second quarter, twice as much as its competitor Omnicom. Publicis has raised all of its objectives for the 2023 financial year.

The market feared that Publicis would stumble in turn. On Wednesday, the advertising group lost 2.8% on the stock market, penalized by a cross-reading of the results of its American competitor Omnicom. The latter had seen its action plunge by 10.4% on Wall Street, after the publication of disappointing activity in the second quarter.

But, on the contrary, the company headed by Arthur Sadoun overcame the obstacle perfectly. Publicis thus generated like-for-like growth of 7.1% in the second quarter.

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“It’s better than expected and more than double Omnicom (+3.4%). Publicis benefits from a larger business mix, particularly with Epsilon and Sapient,” said an Anglo-Saxon analyst.

These two high-tech companies have clearly strengthened Publicis’ profile in key digital-related sectors, thus improving its proposition for its clients. Acquired in 2014, Sapient is the company’s digital transformation platform while Epsilon, acquired in 2019, has strengthened the group in data analysis.

Investments that pay off

“We had to integrate these companies, which was a bit hard at first, but this step was necessary, quite visionary and they are starting to reap the benefits. They were able to make the investments when necessary”, continues the Anglo-Saxon analyst.

“Thanks to our investments in Epsilon – at the heart of creation and media through large-scale personalization – but also in Sapient and Marcel, we are very well positioned to prepare for the future and lead the transformation of our sector”, praised Arthur Sadoun, the chairman of the management board of Publicis in a press release.

“Six years ago, we expressed our desire to move from a communication partner to a transformation partner. Today we have completed this migration and we are outperforming our sector,” he then told analysts.

Over the first half as a whole, Publicis also grew by 7.1% like-for-like for net income of 6.32 billion euros. The operating margin was stable over one year at 17.3%, while net profit increased by 16% to 623 million euros.

A justifiable valuation premium

Thanks to this first semester exceeding its expectations, Publicis has decided to raise its objectives for the current year. The group now expects like-for-like growth of 5% for 2023 compared to a range of 3% to 5% previously. The operating margin is expected at nearly 18% against a range of 17.5% to 18% previously. Free cash flow should reach “at least” 1.6 billion euros against around 1.6 billion euros previously.

On the Paris Stock Exchange, Publicis shares rebounded and rose 4% around 10:30 a.m., signing by far the strongest increase in the CAC 40. “This publication contains a lot of elements to please and in view of the growth of the company, a premium is more and more justified compared to its competitors in terms of valuation multiples”, appreciates the Anglo-Saxon analyst previously quoted.

Quoted by AFP, Arthur Sadoun also cut short speculation of a possible interest from Vincent Bolloré who could bring Publicis closer to Vivendi and Havas. A recent article by Challenges had somewhat revived this old sea serpent of a rapprochement between the two companies, which however never gave any very concrete signs. “Independence is in our DNA,” argued the boss of Publicis.

The leader also tried to demonstrate to analysts how much artificial intelligence – a subject which with the emergence of ChatGPT has become the major theme of the financial markets this year – was at the heart of the Publicis reactor. He notably gave as an example the power of Epsilon whose data is refreshed every five minutes, making it possible to offer the best possible personalization to its customers.