EuroBusiness Media (EBM): Publicis Groupe, the world’s third largest communications group, reports revenue for the first quarter. Maurice Lévy welcome, you are the Chairman and CEO of Publicis Group. First quarter revenue shows an improvement over the fourth quarter of last year. What are the main trends?
Maurice Lévy: Before commenting on these trends, I would like to say a big thank-you to you, to our investors, and to our shareholders and analysts who are following us on this rendez-vous that we are having since now a few years. I think I was one of the very first to start with this new system. And as it is my last one, I really want to say that it has been a fantastic journey and they have been helpful, supporting and sometimes criticising. We went through ups and downs, mostly ups, and it is a great moment for the company and I’m very pleased with the decision which has been made for the future.
Regarding the first quarter, we have revenue increasing by 1.6%, organic growth is decreasing by 1.2%, which is much better than what we anticipated and what the market was expecting. We are still anticipating a relatively low, negative growth for Q2. All this is the consequence of the past issues that we have been experiencing in 2015 and in the beginning of 2016.
EBM: Could you give us more detail on your outlook for the second quarter and for the second half of the year?
Maurice Lévy: As I mentioned, when I was commenting on Q1, I said that Q2 will be slightly negative. So, to put in perspective, when we announced the numbers for Q4 2016, we said that we were expecting to have Q1 negative and Q2 still negative.
The numbers that we currently have shown for Q1 and the ones that we expect to show for Q2 are better than what we anticipated. And we expect Q3 and Q4 to be in the market. We are currently building the base, and I’m confident that in 2018 we will deliver our plan.
EBM: What are your views on the macro environment, for example, the impact of the election of Donald Trump in the United States, or Brexit and ongoing elections in Europe?
Maurice Lévy: Brexit will be hard and, clearly, the negotiations will not be easy and this is something which will probably lead to some uncertainties.
The Trump election which was not forecast by any institute, is leading to two different situations. On the one hand, the stock market is very high, in a kind of euphoria; while at the same time the business and the growth have not picked up. So, there is a kind of disconnection between that stock market, which is very positive, and the business and the growth which are not yet there. Then, there is another problem which is the geopolitical situation, and we see that after the reaction on Syria and showing the muscle on North Korea, there is a kind of instability which seems to be settling down.
In Europe, we will soon know what will be the result of the French election, and for Germany we will have to wait until September.
The feeling that we have and the discussion that we have with all our clients is leading to a very strange conclusion. They all have a far better financial situation than they'd ever had: a very solid balance sheet, the possibility of investing massively, and also the possibility of borrowing money at a cheap price. But they are not investing that much and they are holding back, probably because they are waiting to see more clarity on the geopolitical side as well as on the global economy. So, I think that there is some resources which can materialise relatively soon and probably before the end of the year.
EBM: What is your update on the Power of One?
Maurice Lévy: This is probably the most important transformation that the company has been going through. When we decided that we have to think about our future and to take into account the transformation that all companies have to go through, including our competitors, we had no idea how far we would be going.
So, we went through a process, which was quite long and very inclusive, because we asked more than 350 people to join us in this journey of thinking about the future. And we have implemented a huge, deep transformation, which has changed the job of more than 1,000 people. It’s something which has been a tremendous change, for the good of the company.
But at the same time, clearly there has been a lot of questions regarding the people: Will I be up to the task? Will I have the right tools? How I will handle the client issues? Will that organisation work well? To all these questions, we brought some very strong answers.
The first thing is that the four solutions and Publicis One are working extremely well. All the management teams have been put in place pretty quickly after. We are having a few adjustments, but everything has been done in less than 6 months.
Then, we are going through a fine tuning of the process and in that fine tuning there is obviously the most important aspect, which is our clients. We said we want to put the client at the core, at the centre, of everything we are doing. And we have done it. And as of today, all our top clients have their GCL, Group Client Leader. And in the US we have designated Country Client Leaders, and we will do that in some other countries, too. So, as of today, between the Group Client Leaders and the Country Client Leaders there are more than 60 people who have been promoted, designated, trained and prepared. So they know what they have to do. And it’s not just a nomination or a promotion, it is something which is accompanied by a very solid training programme. They understand what transformation means, they understand what end-to-end service means to a client, and they understand the data, the new technology. And they understand also how to make everything work, bringing the alchemy of creativity and technology to life. So, this is working.
The tools are also implemented and up and running.
We have also made a huge transformation in the digital space. Digital represents today 55% of our business. So, it’s a big chunk of our business, it’s the majority of our business. We created Publicis.Sapient with the acquisition of Sapient, which is a very good acquisition, and this is proving to work every single day. Every time that we are putting together the team of Sapient with the team of Publicis Media or Publicis Communications and going to a client under the management of the Group Client Leader, the results are staggering and extremely positive.
We merged SapientNitro with Razorfish, giving birth to SapientRazorfish. This is also something which is up and running. We have reorganised the operations in the US, where we had to. And we have designated, promoted or nominated the head of each region and each operation, and we are streamlining the operations currently. The net result is that we have something which is more homogenous, which is working much better and we have three brands: Sapient Consulting, SapientRazorfish, DigitasLBi. These three brands know exactly what they have to do. Sapient Consulting is all about consulting and technology. SapientRazorfish is about e-commerce transformation and the new set up of marketing. And DigitasLBi is about mostly digital communications and CRM, e-CRM plus data.
So, we see that each of our operations has a very specific purpose and a very specific objective, and the operation will now start to bear fruit.
EBM: Lastly, how is the succession plan going?
Maurice Lévy: Very well. To be very clear and honest, very well. I think it’s probably the best succession plan for a company like ours, which has seen only two CEOs in 90 years, so it’s not easy. And it’s not very easy to make that kind of move so massively.
I think the choice of Arthur Sadoun is a very good one. He will take over from me on June 1st as the Président du Directoire, meaning Chairman of the Management Board and CEO. This Directoire will be enlarged with the arrival of Steve King, the CEO of Publicis Media, who will be joining our CFO, Jean-Michel Etienne, and our secretary general, Anne-Gabrielle Heilbronner. And there is the management team of all the operations, which is up and running, well established and highly motivated.
When I see that kind of solution, I can only be pleased, and I have great confidence that not only this team will take us to the next level, will generate more growth than I have ever seen in my company – I have to say ‘my’ because I’m so close to Publicis that it’s still mine, and I have my shares. And I feel very good for the future of our clients, because the client at the centre is our core obsession, and this is the only way to make sure that our people will be happy and our shareholders/investors will be rewarded. So, when you look at the whole thing, you can only be pleased.
EBM: Maurice Lévy, Chairman and CEO of Publicis Groupe, thank you very much.
Maurice Lévy: Thank you.
