The company will introduce a €500m cost reduction plan as well as reductions in dividends and compensation for board members as the economic effects of the pandemic appear to hit
Today, Publicis Groupe announced in its Q1 review that while net revenue increased by 17.1%, organic growth is down by -2.9%.
Other key insights from the review show North America coming back to growth and China and Europe already impacted by Covid-19.
The Groupe has announced 'exceptional measures' to face the coming recession and preserve solid balance sheet through the coronavirus crisis, including:
- a €500m cost reduction plan to adapt to new context and be recovery-ready
- proposed dividend to be reduced by 50% to €1.15 per share and to be paid in September
- 30% reduction in fixed compensation for both supervisory board chairman & Groupe CEO, 20% for the management board members
Arthur Sadoun, chairman and CEO of Publicis Groupe said: “It is slightly awkward to share encouraging news at a time when we are preparing ourselves for tougher days. But we actually had a good start to the year, meeting our internal objectives despite the impact of Covid-19, with an organic growth at -2.9%.
“At the end of February before the pandemic started to spread, we recorded almost flat growth, despite double-digit decline in China, mostly driven by 5% organic growth in the US on our creative and media business. It is worth noting that Epsilon 2.0 was also growing at +5% growth at the end of February.
“The month of March was seriously affected by the continuous decline in China and the abrupt deterioration in Europe, due to Covid-19 confinement measures. This strong negative impact was largely compensated by North America returning to growth, including Publicis Sapient which is slightly positive in the US. This performance demonstrates that our model is working.
“But we are now all facing a crisis that will be unparalleled in terms of magnitude, complexity, and probably length. In these uncertain times, we haven’t waited to define our three priorities.
“First and foremost, we have been focusing on protecting our people. We immediately acted to put in place the necessary infrastructure to enable all of our employees to work safely from home. We took a series of measures for their health and well-being, to keep everyone supported. We advanced the launch of our global AI platform Marcel, as it has never been so important to keep our teams across the world connected and fight the effects of isolation.
“Second, we have worked around the clock to help our clients adapt to this situation. We reviewed their current and future commercial and corporate messages. We realigned their media plans to be much more dynamic, deliver short-term ROI and proposed some outcome-based products we have developed for this new market context. We are also helping them accelerate their digital capabilities to drive growth and efficiencies.
“Last but not least, we are taking exceptional measures to face the coming recession and preserve a solid balance sheet. We are implementing a 500 million euro cost-reduction plan with full impact in 2020, to adapt and be recovery ready. We are asking our shareholders for solidarity with our company and our people by cutting dividends by 50% and exceptionally delaying payment until the end of September. At the same time, the Groupe’s management team has decided to reduce its fixed remuneration.
“There is no doubt that we are going through an unprecedented health crisis that will lead us to the greatest recession in living memory.
“It is too early to predict the full impact it will have on our clients and our business, so we will not provide any guidance.
“All of our countries, all of our activities will be impacted to varying degrees. So our response to this situation needs to be structured, multi-faceted and rigorously executed. Our experience in managing cost and cash in times of crisis, our country model and our strong balance sheet will help us to stand firm in this storm and prepare ourselves for recovery.
“Let me take a moment to say that our thoughts are with all of those currently suffering with the virus. I would also like to thank our clients for their partnership. And finally, I would like to express my gratitude to our people, who have demonstrated in the last weeks that we have an incredibly diverse and united team, to come out of this crisis even stronger.”