Publicis hikes full-year guidance on ‘all-time high’ semester

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(Reuters) – Publicis, the world’s third-biggest advertising group, raised its full-year guidance after beating first-half organic revenue growth and core profit margin expectations on Thursday.

The French group now forecasts organic growth of 6% to 7% for 2022, against 4% to 5% previously, and an operating margin rate between 17.5% and 18%, up from about 17.5%.

Arthur Sadoun, head of Publicis Groupe, said in an earnings statement the first half of the year had come in “at an all-time high” as the firm reported 10.4% organic growth, against 8% in a company-compiled consensus.

He pointed to a solid performance across all regions, especially as sales in North America, Publicis’ largest market, profited from the U.S. dollar to euro exchange rate in the second quarter.

Asked about general uncertainty about the industry, Sadoun observed the market may not have assimilated Publicis’ business model, which provides it with more resilience to crises.

Analysts “have not understood that we have gone from a communication partner, which was perhaps more dependent on the media market fluctuations, to a partner in transformation.”

As the coronavirus pandemic has sped up a global shift away from traditional advertising, the firm has relied on its digital and data-driven businesses Sapient and Epsilon, which grew 19.1% and 13.7% in the quarter, respectively.

“In fact, (the) 6% to 7% (guidance) means that we will make between 2% and 4% in the second half – today we see 4%,” Sadoun told journalists in a call.

“The problem (…) is that we don’t know what’s going to happen from a macro point of view, so if things get complicated, we have anticipated in the guidance we give the difficulties.”

Home to ad agencies Leo Burnett and Saatchi & Saatchi, Publicis also surpassed estimates for its operating margin rate, which reached 17.3% in the first six months of the year, up from 16.2% in consensus.

(Reporting by Juliette Portala and Elena Vardon, editing by Cynthia Osterman)

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