Publicis to repay 'salary sacrifice' after Q4 organic growth of -3.9%

Publicis Groupe has posted its Q4 results recording an ahead-of-market organic growth of -3.9%. The world third-largest advertising group registered the growth in part due to its data company Epsilon.  The group reported net revenue growth of -0.9% in 2020. Organic growth in 2020 stood at -6.3% and in Q4 at -3.9%. The company is now planning to pay a dividend of €2.01 per share, with a 46.8% payout ratio. Buoyed by its growth in the quarter, the company also announced the repayment of salary cuts.

Net revenue of the company in FY 2020 was €9.71 billion. While operating income dropped to €983m and operating margin declined to 16 per cent, compared to 16.9 per cent in 2019.

In terms of net revenue, there is a decline of 0.9 per cent, with an operating margin at 16 per cent. The company noted that its free cash flow before change in working capital is around €1.2 billion.

Arthur Sadoun, Chairman and CEO of Publicis Groupe said: 

“ In the tough context of 2020, Publicis posted solid performance thanks to our transformation.
Our long-term investment in data and technology, our country model, and our platform Marcel, have
enabled us to stay strong by containing our revenue decline and maintaining best-in-class financials.

We outperformed the industry average in this year of exceptional crises by delivering a published
growth of -0.9% in 2020 and organic growth at -6.3% for the year, with a Q4 ahead of market and our
expectations at -3.9%.

This is the result of our ability to capture the shift in our clients’ investment towards digital channels,
e-commerce and direct-to-consumer, which intensified throughout the year.

It is particularly visible in the U.S. where Epsilon delivered growth of 5.5% in Q4, enabling our most
important country to be slightly positive. This was also the case for Publicis Sapient.

We gained market share by growing with our top 200 clients by 1.8%, and recorded a continued new
business momentum with wins like Kraft-Heinz, Reckitt Benckiser, Pfizer, Visa, L’Oréal in China,
TikTok and Sephora.

Last but not least, we continued to post the best financial ratios of the industry with an operating
margin rate of 16% and a free cash flow of close to 1.2 billion Euros while significantly reducing our
net debt at around 800 million euros at year-end.

Today, our solid results mean we are able to propose a dividend of 2€, slightly below our pre-pandemic
level, corresponding to a payout of 46.8%.

It is important to note the sustainability of this performance, which was achieved with virtually no
benefit from government schemes, including in France where we decided not to take advantage of
any state aid.

When we saw at the beginning of the crisis how devastating the pandemic could be, we quickly acted
to redefine our plans. This included a voluntary pay cut by around 6000 of our managers, and a new
set of objectives for the rest of the year. Thanks to the collective and extraordinary performance of our
people in these difficult times, we have been able to post results that are above industry averages,
allowing us to repay the salary sacrifice and set aside a higher bonus pool to fairly reward and
recognize our teams.

I’d like to thank everyone in the group for their incredible efforts and our clients for their confidence
and partnership.

It is clear now that the crisis did not end with 2020. The world will continue to be marked by the social
and the economic effects of the pandemic for some time. So we are going into this new year with a
renewed fighting spirit, ready to double down on our efforts to keep our people safe, make our clients
win in a platform world and continue to improve our efficiency.

Our transformation helped us stand strong in the storm of the past year. We are clear-sighted about
the challenges that lie ahead, but thanks to our assets, our model, our people, and the trust of our
clients, we are confident that we will emerge from this crisis as a stronger company