(News Bulletin 247) – The advertising group recorded like-for-like growth of 5.3% over the first three months of the year, once again exceeding consensus. An encouraging start to the year as the economic outlook seems to be improving.

Publicis’ transformation in recent years towards a company more focused on digital and data analysis is still bearing fruit. The advertising group inaugurated the publication season for the first quarter of the CAC 40 this Thursday by delivering its activity for the first three months of the year. And the company led by Arthur Sadoun did not miss its meeting with the market.

From January to March, the company’s net income, equivalent to turnover, stood at 3.23 billion euros, up 4.9% year-on-year in published data and 5.3% in comparable data. According to a consensus cited by Oddo BHF, which refers to a “solid” quarter, analysts expected on average an increase of 4.6% on a comparable basis.

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Tech progress

In detail, “performance is good in the United States but also in Europe while the base effect was difficult,” notes Oddo BHF.

In North America (62% of revenues), Publics saw its growth on a comparable basis amount to 4.8%, a bit less than the 4.9% expected by the consensus, notes Bank of America. In this region, the company benefited from a “high single digit” performance (between 7% and 9%) from Epsilon, an American specialist in data analysis and targeted marketing, acquired in 2019 by Publicis.

Its division dedicated to digital transformation Sapient recorded growth of 2.2% on a comparable basis, which reflects an improvement from one quarter to the next, since its revenues were stable in the fourth quarter of 2023.

In Europe (25% of revenues), Publicis clearly exceeded expectations with a like-for-like increase in its revenues of 6.1% compared to a consensus of 4%. France notably posted an increase of 9.4%, “mainly driven by high-single digit growth from Media and by Publicis Sapient, which reiterated double-digit growth this quarter”, explains the company.

By customer segment, healthcare posted growth of 23% while TMT, i.e. tech and telecoms, recorded a rebound of 11%.

“Tech’s rebound is a welcome surprise given recent cautious peer commentary (Accenture, S4) on the spending environment in this vertical. In theory, this is favorable for WPP and Interpublic Group, but at this point “, we believe that the recovery in the technology sector is more linked to the specific offering of Publicis than to a general recovery in marketing budgets”, judges Bank of America.

Prospects soon to be raised?

On the Paris Stock Exchange, after a somewhat timid start, Publicis shares rose 1.14% around 1:50 p.m. and marked the largest increase in the CAC 40.

Bank of America notes that the group far exceeded growth expectations for the 18th consecutive quarter. Small nuance, however: the investors surveyed by the bank expected more than the analysts, counting on growth of 5% to 6%, against 5.3% in the end and 4.6% for the consensus.

Regarding its outlook, Publicis confirmed that it expects like-for-like growth of between 4% and 5% for the whole of 2024, an operating margin rate of 18%, as well as an operating cash flow of between 1.8 billion and 1.9 billion euros before change in working capital requirement.

For the second quarter alone, the group indicated that it anticipated an increase in its revenues within its annual range.

Bank of America, however, believes that the growth forecast for 2024 is cautious, to the extent that it should reach 5% in the first half of the year and that the basis of comparison will be less demanding in the second part of the year.

“At the same time, the macroeconomic situation has improved, advertising budgets are being revised upwards and Publicis continues to perform well on the new contract front (for example, it recently won a new creative contract for Pfizer)”, adds the American establishment.