EuroBusiness Media (EBM): Publicis Groupe, the world’s third largest communications group, reports results for the first quarter of 2013. Maurice Lévy welcome. You are the CEO of Publicis Groupe, what are your comments on the group’s performance in the first quarter?
Maurice Lévy: We are extremely happy with the results that we have had. The first quarter is showing 1.3% organic growth, while we were expecting 0.3%. So we are nicely ahead of our internal objectives. That situation is a reflection of the general situation of the world, and particularly Europe. When we were showing the 2012 numbers, I mentioned that 2013 would be a very difficult year. And what we have seen and what we will be seeing is a contrasted situation, where the US are showing a good growth, emerging markets also, and Europe a negative trend. So this is the current situation that we have to address.
EBM: You talked about contrast from region to region. Talk me through the trends you are seeing within those geographical areas?
Maurice Lévy: North America is showing for us a growth of 4.4%. Regarding the rest of the world and emerging markets, we have 5.5% for emerging markets, 3.2% for the rest of the world. The sick child of the world is Europe, with a negative number of -6.5%, which compares with last year, a 3.6% positive, which makes in total a 10% difference. So this has a strong impact on our numbers. It was something forecast, and that’s the reason why we were expecting to have a very low growth at the beginning of the year, and we are confident that things will improve during the year.
EBM: Given that sluggishness of Europe, and the dynamic growth in Asia and other markets that you mentioned, where do you see the group evolving over the next 5 years?
Maurice Lévy: I would like first to speak, if you allow me, about the full year. We are expecting a good growth for the full year, between 3.2% and 3.6%, which is above last year’s growth and above the average of the market. Regarding the next 5 years, we do expect a growth which will be markedly higher than the average of the market. Why that? Simply because we are getting the benefit of our investment in two very important segments: one is Digital, which today represents 37% of our business in Q1, and the emerging markets, which are representing roughly 24%. So in total, at the end of the 5 years, we do expect to have 75% of our business derived from these two segments of fast growth from the world. So we have a good confidence in our ability to grow much faster than the market.
EBM: I do want to come onto your Digital market, but before that, can we have an update on the integration of LBi?
Maurice Lévy: LBi, as you know, is an agency which is mainly in Europe, slightly in the US, and with some very good operations in Asia Pacific. We made a public offering for it and we got 98%-plus of the shares. We have decided to create DigitasLBi by merging the two operations and thus creating the largest and the most complete digital network in the world. This is going on very nicely, very positively. The integration plan is followed very seriously. And we feel that this integration will be, again, one of the most successful operations of integration that we have had in the Publicis Groupe. So I’m very confident with this. The leadership is in the hands of Luke Taylor, and we feel very confident that he will take LBi – the merger operation DigitasLBi – pretty soon to a new level.
EBM: Digital activities now make up 37% of the group's revenues in the first quarter. Are you satisfied with that current balance, or do you see Digital representing an even greater proportion of your revenues in the next 5 years?
Maurice Lévy: Our objective is clearly to have 50% of our business derived from Digital. We believe that we will need to make some acquisitions, and we will grow organically faster than the market. By the way, in the first quarter of 2013, the growth in Digital has been 8.5% in the Group. This gives us a good level of confidence for growing faster this segment. And with some clear, positive acquisitions in some segments that we cherish, such as e-commerce, we will be able to reach the level of 50%.
EBM: What’s your timeline on that?
Maurice Lévy: Five years.
EBM: With the ramp-up of Digital, what does it mean for your legacy businesses today?
Maurice Lévy: I don’t like the idea of legacy business, because I think that brand building and creating a bond with the consumer, however we do it, is not a legacy business, it’s a business of the future. And clearly, there is some declining business, which is the Analog business, but everything we are doing around this Analog business is something which is serving extremely well the work that we are doing in Digital. And the fact that we can combine the talent and the skills from digital natives, the technology and the knowledge that we have in brand building and derived from the creative work that we do in the advertising agencies, is something that is putting us in a very good position. So there is no legacy business in Publicis Groupe, there is only business which will grow faster than the market.
EBM: You will be hosting an Investor Day in London on April 23. Should we expect any ground-breaking strategic announcements this time?
Maurice Lévy: I don’t know if we will have ground-breaking announcements, but I’m sure it will be a very interesting day. First, it will be at the LBi offices, so people will see what a digital agency is all about in our days; they will also have a lot of presentations, not only two or three, but many. Plus a kind of kiosk where they will be able to speak with the people who are creating the analytics, the measurements, the new tools, the new operations, the new digital techniques, and they will see also a lot of technology. So all this is something which will be extremely interesting. And I’m sure that they will also be interested by two pieces of information: how we will reach our target in terms of growth, and how we will be able to augment our margins by 200 to 400 basis points. All this is something that they will see. They will also have the opportunity of seeing that we are poised for new business. In the first quarter, we got $2.1 billion of new business, net of losses, and we have a very solid pipeline which gives us a feeling that this year will be a record year in terms of new business. So we feel good.
EBM: Maurice Lévy, CEO of Publicis Groupe, thank you.
Maurice Lévy: Thank you.
