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Publicis Groupe : First Half 2023 Results

Publicis Finance Services
Publicis Finance Services


Outperforming in Q2 with +7.1% organic growth

-

Upgrade of FY 2023 guidance on all KPIs

July 20, 2023  

  • Q2 organic growth at +7.1% thanks to revenue mix and New Business tailwind

  • Continued sustained performance across regions: U.S. +5%, Europe +15%, China +7%

  • Operating margin rate maintained at historically high level of 17.3% in H1

  • Headline diluted EPS up +11% at €3.21, Free Cash Flow slightly up at €725m despite FY’22 R&D tax payment

  • Upgrade of 2023 guidance despite persistent macro uncertainties: organic growth now expected at circa +5%, operating margin rate close to 18%, Free Cash Flow at least €1.6bn

ANNUNCIO PUBBLICITARIO

Q2 2023

  •  Net revenue

€3,239m

  •  Reported growth

+5.4%

  •  Organic growth

+7.1%

H1 2023 Results

  • (EUR million)

H1 2023

2023 vs 2022

  • Revenue

7,105

+8.5%

  • Net revenue

6,318

+7.6%

  • Organic growth

+7.1%

 

  • Operating margin

1,093

+7.4%

  • Operating margin rate

17.3%

 

  • Headline Groupe net income

813

+11.8%

  • Headline diluted EPS (euro)

3.21

+11.3%

  • Free Cash Flow1

725

+2.4%

  • Free Cash Flow1,2
    excluding 2022-related TCJA

835

+17.9%

Arthur Sadoun, Chairman and CEO of Publicis Groupe:

The first half of the year has been strong for Publicis.

In Q2, we continue to outperform the market on organic growth thanks to our unique revenue mix and new business track record with +7.1%, ahead of expectations after double-digit growth in 2022. 

We delivered the best financial KPIs in the industry in H1 thanks to our platform organization, with operating margin at 17.3%, in line with the historically high level of 2022.

As we shifted from a communication to a transformation partner for our clients, we are confirming that we have become a stronger company since 2019 with our net revenue up +45% on a reported basis and our operating margin up +68% over this period. 

With our investments in Epsilon, powering Creative and Media through personalization at scale, Sapient and Marcel, we are uniquely positioned to lead the future of our industry. It will inevitably be shaped by data, tech and AI that are already at the heart of our business model both in how we work for our clients and in the way we operate.
  
But Publicis is not only future-proof. It is also more resilient to business cycles, allowing us to upgrade our guidance on all KPIs for the year despite persistent macroeconomic uncertainty. We now expect to deliver organic growth at circa +5% for 2023, above our 3Y CAGR of +4%, with operating margin rate close to 18%.

I would like to sincerely thank our clients for their continued trust and all our talent for their dedication throughout the last months.”

*                *

*

Publicis Groupe’s Supervisory Board met on July 19th, 2023, under the chairmanship of Maurice Lévy, to examine the 2023 first semester accounts presented by Arthur Sadoun, CEO and Chairman of the Management Board.

KEY FIGURES

EUR million, except per-share data and percentages

H1 2023

H1 2022

2023
vs 2022

Data from the Income Statement and Cash flow Statement

 

 

 

Net revenue

6,318

5,873

+7.6%

Pass-through revenue

787

674

+16.8%

Revenue

7,105

6,547

+8.5%

EBITDA

1,335

1,287

+3.7%

% of Net revenue

21.1%

21.9%

-80bps

Operating margin

1,093

1,018

+7.4%

% of Net revenue

17.3%

17.3%

-

Operating income

843

761

+10.8%

Net income attributable to the Groupe

623

537

+16.0%

Earnings Per Share (EPS)

2.48

2.15

+15.3%

Headline diluted EPS3

3.21

2.88

+11.3%

Free Cash Flow before change in working capital requirements

725

708

+2.4%

Data from the Balance Sheet

June 30, 2023

Dec 31, 2022


Total assets

33,700

35,898

 

Groupe share of Shareholders’ equity

9,188

9,635

 

Net debt (net cash)

226

(634)

 

NET REVENUE IN Q2 2023

Publicis Groupe’s net revenue in Q2 2023 was 3,239 million euros, up +5.4% from 3,073 million euros in 2022. Exchange rates had a negative impact of 73 million euros. Acquisitions, net of disposals, accounted for an increase in net revenue of 26 million euros. Organic growth reached +7.1%.

Breakdown of Q2 2023 Net revenue by region

EUR

Net revenue

Reported

Organic

million

Q2 2023

Q2 2022

Growth

Growth

North America

1,955

1,912

+2.2%

+4.9%

Europe

809

709

+14.1%

+15.2%

Asia Pacific

300

289

+3.8%

+2.6%

Middle East & Africa

91

90

+1.1%

+6.5%

Latin America

84

73

+15.1%

+5.9%

Total

3,239

3,073

+5.4%

+7.1%

North America net revenue was up +2.2% on a reported basis in Q2 2023, including a negative impact of the US dollar to Euro exchange rate. Organic growth in the region was +4.9%, of which +5.0% in the U.S.. Publicis Sapient grew at a very solid +5.1% organically despite high comparables of 17%, in a context of slower decision making process for DBT projects. Epsilon grew +6.9% organically, notably driven by outperforming Digital Media. Canada was up +2.2% organically.

Net revenue in Europe was up by +14.1% on a reported basis. It was up by +15.2% on an organic basis, or +11.6% excluding the contribution of our Outdoor Media activities & the Drugstore. Organic growth in the U.K. was +17.0%, with a notable double-digit growth in Media and at Publicis Sapient. Organic growth in France was +5.0%4 with double-digit growth in Media and at Publicis Sapient. Germany was up +9.5% organically with double-digit growth in Media and very solid Publicis Sapient. Central & Eastern Europe grew +17.1% organically thanks to double-digit growth in Poland, Hungary and Czech Republic and the resumption of activity in Ukraine.

Net revenue in Asia Pacific was +3.8% on a reported basis, and +2.6% organically. China accelerated to +7.0% organic growth after +3.7% in Q1. Thailand sequentially improved while remaining in negative territory due to the phasing of a large project, while Singapore, Vietnam and Japan posted double digit growth. Australia and New Zealand were stable.

In Middle East & Africa, net revenue was up +1.1% on a reported basis, and +6.5% organically on top of a high comparable basis of +15.3% in Q2 2022.

Net revenue in Latin America was up +5.9% organically driven by strong Media like in Q1. The region posted +15.1% on a reported basis notably benefitting from the acquisition of Practia.

NET REVENUE IN H1 2023

Publicis Groupe’s net revenue for the first half 2023 was 6,318 million euros, up by +7.6% compared to 5,873 million euros in H1 2022. Exchange rate variations over the period had a low negative impact of 12 million euros. Acquisitions (net of disposals) have a positive impact of 40 million euros on net revenue. Organic growth was +7.1% in H1 2023.

Breakdown of H1 2023 net revenue by sector

On the basis of 3,298 clients representing 91% of Groupe net revenue

Breakdown of H1 2023 net revenue by region

EUR

Net revenue

Reported

Organic

million

H1 2023

H1 2022

growth

growth

North America

3,893

3,660

+6.4%

+5.3%

Europe

1,552

1,371

+13.2%

+13.8%

Asia Pacific

550

550

0.0%

+1.7%

Middle East & Africa

179

165

+8.5%

+11.2%

Latin America

144

127

+13.4%

+6.7%

Total

6,318

5,873

+7.6%

+7.1%

Net revenue in North America was up by +5.3% on an organic basis in the first half (+6.4% on a reported basis). The U.S. performed strongly at +5.4% organically reflecting the strength of our model.

Europe posted +13.8% organic growth in H1 (+13.2% on a reported basis). Excluding the impact of the Groupe’s Outdoor Media activities and the Drugstore in France, the organic growth in Europe is +12.1%. The U.K. was at +20.3% organic, France at +4.0%5, Germany at +9.9% and Central & Eastern Europe at +14.0%.

Asia Pacific net revenue was up by +1.7% on an organic basis (flat on a reported basis). China reported an organic growth of +5.6%, and Australia & New Zealand were up by +2.4% on an organic basis.

Net revenue in the Middle East and Africa region was up by +11.2% on an organic basis (+8.5% reported) and up by +6.7% in Latin America (+13.4% reported).

ANALYSIS OF H1 2023 KEY FIGURES

Income Statement

EBITDA amounted to 1,335 million euros in H1 2023, compared to 1,287 million euros in H1 2022, up by +3.7%. This represents 21.1% of net revenue.

Personnel costs totaled 4,200 million euros in H1 2023 from 3,888 million euros in H1 2022, an increase of +8.0% close to the growth in net revenue. As a percentage of net revenue, personnel expenses were 66.5% in H1 2023, versus 66.2% in H1 2022. Fixed personnel costs were 3,725 million euros and represented 59.0% of net revenue versus 57.5% in H1 2022. As expected the cost of freelancers decreased by 68 million euros in H1 2023 or 140 basis points, representing 165 million euros. Restructuring costs were 45 million euros, up versus 30 million euros in H1 2022.

Non personel costs amounted to 1,025 million euros in H1 2023, compared to 967 million euros in H1 2022. This represented 16.2% of net revenue in H1 2023 versus 16.5% of net revenue in H1 2022. They comprised:

  • Other operating expenses (excluding pass-through costs, depreciation & amortization) amounted to 783 million euros, compared to 698 million euros in H1 2022. This represents 12.4% of net revenue compared to 11.9% in H1 2022.

  • Depreciation and amortization charge was 242 million euros in H1 2023 compared to 269 million euros in H1 2022, a reduction of 10.0%, or 27 million euros. It reflects the consolidation of our real estate footprint as well as an increase in the share of SaaS platforms used by the Groupe and directly expensed.

As a result, the operating margin amounted to 1,093 million euros, up by +7.4% compared to H1 2022. This represents an operating margin rate of 17.3% in H1 2023, in line with H1 2022.

Operating margin rates by geographies were 18.6% in North America, 16.3% in Europe, 17.3% in Asia-Pacific, 10.1% in Middle East/Africa and 2.8% in Latin America.

Amortization of intangibles arising from acquisitions totaled 142 million euros in H1 2023, up by 5 million euros versus H1 2022. Impairment losses on real estate consolidation charge amounted to 112 million euros compared to 44 millions in H1 2022 in a context of real estate footprint optimization.

In addition, non-current expense was an income of 4 million euros compared to a cost of 76 million euros in H1 2022 which included a loss related to the Groupe’s exit from Russia.

Operating income totaled 843 million euros in H1 2023, after 761 million euros in H1 2022.

The financial result, comprising the cost of net financial debt and other financial charges and income, is a charge of 14 million euros in H1 2023 compared to a charge of 40 million euros last year.

  • The cost of net financial debt was an income of 42 million euros in H1 2023, compared to a cost of 27 million euros in H1 2022. It included 59 million euros of financial expenses (56 million euros in H1 2022) and financial income of 101 million euros, improving from 29 million euros last year largely thanks to higher remuneration on cash balances.

  • Other financial income and expenses were a charge of 56 million euros in H1 2023, notably composed by 39 million euros interest on lease liabilities and 8 million euros cost from the fair value remeasurement of Mutual Funds. In H1 2022, other financial income and expenses were a charge of 13 million euros, notably composed by 45 million euros interest on lease liabilities and 34 million in income from the fair value remeasurement of Mutual Funds

The revaluation of earn-out payments amounted to an income of 1 million euros in H1 2023, compared to a charge of 4 million euros in H1 2022.

The income tax charge was 205 million euros in H1 2023, corresponding to a forecasted effective tax rate of 24.8% in 2023, compared to 189 million euros in H1 2022 corresponding to an effective tax rate of 23.4%.

The share of profit of associates is a 3 million euros income in H1 2023 (5 million euros income in H1 2022).

Minority interests were a gain of 5 million euros in H1 2023 compared to a loss of 4 million euros in Groupe results in H1 2022.

Overall, net income attributable to the Groupe was 623 million euros in H1 2023, compared to 537 million euros in H1 2022.

Finally the Earning Per Share was 2.48 euros in H1 2023, compared to 2.15 euros in H1 2022, up by +15.3%.

Free Cash Flow

EUR million

H1 2023

H1 2022

EBITDA

1,335

1,287

Repayment of lease liabilities and related interests

(207)

(215)

Investments in fixed assets (net)

(75)

(82)

Financial interest paid (net)

17

(63)

Tax paid

(386)

(251)

Other

41

32

Free cash-flow before changes in WCR

725

708

TCJA transitional cash tax related to 2022 paid in January 2023

110

-

Free cash-flow before changes in WCR

835

708

The Groupe’s free cash flow, before change in working capital requirements, is up by 17 million euros compared to H1 2022, to 725 million euros. Excluding the TCJA transitional cash tax related to 2022 and paid in January 2023, Free cash flow is up by 127 million euros to 835 million euros.

Repayment of lease liabilities and related interests amounted to 207 million euros in H1 2023 (215 million euros in H1 2022). Net investments in fixed assets were 75 million euros (82 million euros in H1 2022).

Financial interest were an income of 17 million euros, compared to a cost of 63 million euros in H1 2022, reflecting higher remuneration on cash balances.

Tax paid amounted to 386 million euros, up by 135 million euros compared to H1 2022 including 110 million euros due to the TCJA tax payment realized in January 2023 and related to 2022.

Net debt

Net financial debt amounted to 226 million euros as of June 30, 2023 compared to 634 million euros net cash position as of December 31, 2022 reflecting the seasonality of the activity. The Groupe's last twelve months average net debt as of June 30, 2023 amounted to 498 million euros compared to 1,024 million euros as of June 30, 2022.

ACQUISITIONS AND DISPOSALS

On January 4, 2023, Publicis announced the acquisition of Yieldify, a London-based marketing technology company. Founded in 2013, Yieldify’s leading platform and service enable companies to better personalize consumers’ website experiences, driving incremental revenue and other desired outcomes by delivering the right message at the right time based on a consumer's profile and stage in their purchase journey. Yieldify will become part of Epsilon, and its onsite personalization, conversion optimization and customer journey offerings will complement Epsilon PeopleCloud to better address the mid-market.

On January 10, 2023, Publicis announced the acquisition of Advertise BG, one of the leading performance marketing agencies in Bulgaria. The strategic acquisition will further reinforce Publicis Groupe Bulgaria’s competencies in digital transformation, adding firepower to its existing offering across digital strategy, data, social media, and digital content creation.

On March 30, 2023, Publicis announced the acquisition of Practia, based in Buenos Aires, a leading Latin America independent technology company and provider of digital business transformation services. With its 1,200 experienced professionals, this acquisition will position Publicis Sapient to enter the Latin America market while establishing a foundation for a nearshore delivery platform that will enable the company to better service clients based in North America.

On May 23, 2023, Publicis announced the acquisition of full stake in Publicis Sapient AI Labs, an innovative artificial intelligence research and development joint venture launched in 2020 in partnership between Publicis Sapient, Elder Research and Tquila. The acquisition will further strengthen Publicis Sapient’s data & AI capabilities and enable the company to develop innovative solutions across industries for a wide range of applications, such as generative AI, natural language processing (NLP), computer vision and autonomous systems.

On June 5, 2023, Publicis announced the acquisition of Corra, based in New York, an ecommerce leader recognized by Adobe as one of the top commerce firms in North America. Corra will augment Publicis Sapient’s existing expertise in commerce solutions, including Adobe Commerce, while extending Publicis Sapient’s offerings in digital and omnichannel commerce. By acquiring Corra, Publicis Sapient will further establish itself as a global leader across the entire Adobe Product Suite, in addition to further cementing its already leading capabilities.

On June 15, 2023, Publicis and Carrefour announced the launch of their joint-venture Unlimitail, to address the booming retail media market in Continental Europe, Brazil and Argentina. The launch of the company comes six months after the initiative was announced and has been unveiled during VivaTech.
Unlimitail will partner with retailers and brands, bringing the scale, connectivity and consistency for retail media to reach its full potential in those geographies. It is built on the most advanced technologies, “CitrusAd powered by Epsilon”, and the deepest retail expertise from Carrefour. Unlimitail has already converted its first 13 retail partners, representing together more than 120 million loyalty customers.

CSR

During the first half of 2023, Publicis Groupe continued its actions and innovated in its various priorities.

1 - Diversity, Equity and Inclusion: the 4th edition of "Pause for Action" in the United States on 27 June 2023 brought together committed employees to take stock and work together on inclusion, diversity and social justice. The data published on the diversity of our teams in the United States shows continued progress on several indicators, illustrating how far we have come in three years. The Chairman of the Management Board, Arthur Sadoun, emphasised the importance of all these actions, which are assessed over the longer term, and welcomed the financial commitments made with 45 million euros dedicated to diversity and social justice, as announced in 2020. This target has been reached thanks in particular to the "Once And For All Coalition" initiative which funds content creators in favour of the widest possible diversity.

In March 2023, a special edition of the Women's Forum was held in Washington, bringing together 250 experts to discuss education as one of the keys to equity, with a focus on health, climate and peace. In June 2023, with a view to the third edition of the Women's Forum Singapore (scheduled for March 2024), a one-day "Meet-Up" kicked off work on education as a lever for change, with 80 experts from the region and many talented young people brought together.

The "Working with Cancer" pledge launched by Arthur Sadoun in January 2023 has now been taken up by close to 700 companies worldwide, representing more than 20 million employees. The common objective is to break the taboo of cancer6 in the workplace, provide better protection for affected employees and offer them (and their carers) better support. The Publicis Groupe campaign won the Grand Prix for Good at Cannes Lions in June 2023.

Marcel, the Groupe's internal platform remains a central place for employees, hosting quarterly plenary sessions led by country managers and their leaders. It is also the platform used in the countries for exchange, work and dialogue with stakeholders on many topical issues. From February 2023, employees have had access to a series of modules and live sessions, sharing the latest advances in artificial intelligence and giving them access to a number of tools to train and collaborate, in order to best support their customers.

2 - Responsible marketing and business ethics: the carbon emissions calculation tool A.L.I.C.E (Advertising Limiting Impacts & Carbon Emissions) is used for 220 clients/brands. A.L.I.C.E enables all the Group's activities (creation, production, media, technology, events, etc.) to measure their impact (100 countries) using the GHG Protocol method and with the support of Bureau Veritas for the calculation methodology and the updating of emission factors. Publicis Groupe remains very involved in the work carried out by the industry at international level, in particular Ad Net Zero on the search for a methodological consensus on measuring impacts with all stakeholders.

3 - Fighting climate change: as part of the action plan designed to achieve the carbon emission reduction targets for 2030 (-50%) & 2040 (-90%), validated by SBTi (Science Based Targets Initiative) and aligned with the 1.5° scenario, the Groupe has continued its internal work, in particular:
- The introduction of an internal shadow price for carbon to mobilise all the Group's agencies in reduction actions and to better quantify the direct impacts linked to the various activities,
- The introduction of a new voluntary carbon credit plan (VCCs Plan 2 - 2024/2028) to follow on from the first VCC Plan 1 (2020/2023).

Finally, in June 2023, the success of VivaTech was confirmed with more than 150,000 visitors in Paris for this 7th edition - becoming the world's leading event for the Tech sector, with sessions over three days bringing together more than 11,000 start-ups, around prestigious guests with a peak of 1 billion impressions on social networks. The VivaTech News channel reached over 5 million people live over the three days.

The CSR actions of the Groupe and its agencies are publicly accessible in the CSR section of the Groupe website, and the data is summarised in the CSR Smart data section.

2023 OUTLOOK

With a better than expected first half 2023, and driven by the strength of its unique model, the Groupe upgrades its guidance on all KPIs for the full year 2023 despite persistent macroeconomic uncertainties.

  • Organic growth is now expected at circa +5%, versus the top half of the +3% to +5% previous guidance.

  • Operating margin rate close to 18% versus between 17.5% and 18% previously.

  • Free cash flow before working capital requirement of at least 1.6 billion euros7, versus circa 1.6 billion euros previously.


NEW BUSINESS

EUROPE

Santen France (Health), Glaxo Smith Kline (Health), Comité Colbert (Creative), Speedy (Data), Carlsberg (Creative), Abeille Assurances (Creative), Visa (Technology), DomusVi (Technology), DocuSign (Creative), The Football Association Premier League (Creative), Allwyn (Creative), Pivovara Daruvar (Creative), heroal (Creative), Deutsche Telekom (Creative), DATEV (Influence), Samsung (DTC), PepsiCo (Media), L’Oréal (Media), Tesco (Creative), Asda (Technology), Renault (Influence), FoodWell (Media), Notino (Media), Casavo (Creative), La Poste (Media), Dream Games (Media), Cassa Depositi e Prestiti (Media), Meggle (Media), Île-de-France Mobilités (Creative), TotalEnergies (Creative), Bioderma (Creative), Pernod Ricard (Influence), Ovo Energy (Creative), Le manège à bijoux (Creative), Inserm (Media), SNCF (Digital), John Lewis (Creative), Alfa Romeo (Air France KLM (Influence), Ikea (Creative & media), Gruppo Iren (Creative), Bulgari (Creative), Gruppo Campari (Influence), Western Union (Media), Beko (Influence), Société Générale (DBT), IVECO (Media), Sony Music (Digital)

NORTH AMERICA

Krafton (Influence), Intuit (Creative), Shelter Movers (Influence), Universite de Sherbrooke (Creative), Steak 'n Shake (Creative), Loblaws (Cretaive), Mattress Firm (Creative), Jasco Games (Creative), Wondery (CRM), McDonalds (CRM), Milton Hershey School (Influence), University of Oklahoma (Production), Progress Residential (Production), Wyndham Hotels & Resorts (Production), Robert Walters (Production), HP (Commerce), Sun Life of Canada (Commerce), Rite Aid (Media), The PUR Company (Media), MTY Food Group (Influence), General Mills (Commerce), Dunkin’ (Creative), Walgreens (Media), KB Home (Creative), Burger King (Creative), Sanofi (Influence), Virgin Mobile (Creative), Toronto Parking Authority (Creative), HealthPartners Canada (Influence), Groupe Atallah (Media), Kicking Horse Coffee (Creative & Influence), General Motors Company (Production), Tillamook County Creamery Association (Creative), Signet Jewelers (Media), Blue Diamond Growers (Media), Turo (Creative), UPS (Creative), LVMH (Media), Shark Beauty (Creative), New Age Products (Media), Samsung (Commerce), TGI Fridays (Media)

ASIA PACIFIC/MEA

Miele (CRM), United Homeware Company (Creative), Krungthai Bank (Creative), Anker (Media), Royal Automobile Club (Media), Charles & Keith (Commerce), Nick Did This (Media), Nine Network (Creative), Essity (Media), OSHO (DBT), La Trobe University (DBT), LVMH (Production), Cathay Pacific Airways (Commerce), Pepsico (Production), Duolingo (Creative), Aeries Financial Technologies (Media), Central Provident Fund Board (Production), AIA Company (Media), Haleon (Production), LOréal (Media & Production), The Standard Bank of South Africa (Creative), Sanofi (Creative), Nestlé (Production), Diageo (Commerce), Mondelez (Production), Pizza Hut (Creative), Cancer Council Victoria (Media), Emirates NBD (Creative), Grupo Bimbo (Creative), Microsoft (Influence), JioMart (Creative), AkBank (Media), Novartis (Creative & Production), United Breweries (Production), Charlotte Tilbury Beauty (Creative), Genesis Motor (Creative), Torrent Pharmaceuticals (Creative), More Retail (Media), GlaxoSmithKline (Creative), Crocs (Creative), Shanghai Neobio (Creative), FWD Group (Media), Bank of China (Media), Yili (Creative), Singhealth (Digital), P&G (Digital), Oritain (Creative & Media), Neom Company (Creative), Renault (Media), Bosideng (Production), HSBC (Creative), BASF (Creative), Union Bank of the Philippines (Creative), Roborock (Production), Indeed (Influence), Samsonite (Media), New Balance (Production), Keypath Education (Media), Jio-bp (Digital), Enamor (Digital), UniScholars (Creative)

LATAM

LOréal (Media), Bayer (Media), Samsung (Media), Nestlé (Creative), PicPay (Creative), Pizza Hut (Commerce), Polla Chilena (Media)

GLOBAL
Adobe (Media), Mondelez (Production), King (Creative), Ninjacart (Creative), Alvarium Tiedemann (Creative), Amplifon (Creative), Pfizer (Creative, Media, Data, Production)

*                *
*

Disclaimer

Certain information contained in this document, other than historical information, may constitute forward-looking statements or unaudited financial forecasts. These forward-looking statements and forecasts are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements and forecasts are presented at the date of this document and, other than as required by applicable law, Publicis Groupe does not assume any obligation to update them to reflect new information or events or for any other reason. Publicis Groupe urges you to carefully consider the risk factors that may affect its business, as set out in the Universal Registration Document filed with the French Autorité des Marchés Financiers (AMF) and which is available on the website of Publicis Groupe (www.publicisgroupe.com).

About Publicis Groupe - The Power of One
Publicis Groupe [Euronext Paris FR0000130577, CAC 40] is a global leader in communication. The Groupe is positioned at every step of the value chain, from consulting to execution, combining marketing transformation and digital business transformation. Publicis Groupe is a privileged partner in its clients’ transformation to enhance personalization at scale. The Groupe relies on ten expertise concentrated within four main activities: Communication, Media, Data and Technology. Through a unified and fluid organization, its clients have a facilitated access to all its expertise in every market. Present in over 100 countries, Publicis Groupe employs around 98,000 professionals.
www.publicisgroupe.com | Twitter:@PublicisGroupe | Facebook | LinkedIn | YouTube | Viva la Difference!



Contacts
Publicis Groupe

Lizzie Dewhurst

Corporate Communications

+44 794 991 81 94

lizzie.dewhurst@publicis.com

Michelle McGowan

Corporate Communications

+1 312 315 5259

michelle.mcgowan@publicisgroupe.com

Alessandra Girolami

Investor Relations

+ 33 1 44 43 77 88

alessandra.girolami@publicisgroupe.com

Lionel Benchimol

Investor Relations

+ 33 1 44 43 70 27

lionel.benchimol@publicisgroupe.com

Lorène Fleury

Investor Relations

+ 33 1 44 43 57 24

lorene.fleury@publicisgroupe.com

Appendices

Net revenue: organic growth calculation

(million euro)

Q1

Q2

H1

 

Impact of currency
at end June 2023

(million euro)

2022 net revenue

2,800

3,073

5,873

 

GBP (2)

(20)

Currency impact (2)

61

(73)

(12)

 

USD (2)

43

2022 net revenue at 2023 exchange rates (a)

2,861

3,000

5,861

 

Others

(35)

2023 net revenue before acquisition impact (b)

3,065

3,213

6,278

 

Total

(12)

Net revenue from acquisitions (1)

14

26

40

 

 

2023 net revenue

3,079

3,239

6,318

 

 

Organic growth  (b/a)

+7.1%

+7.1%

+7.1%



 

(1)   Acquisitions (Profitero, Practia, Tremend, Tquila, Wiredcraft, Yieldify, Retargetly, Corra, Bizon, VivNetworks, Cheat, Changi, ARBH, Perlu, Advertise Bulgaria), net of disposals (Russia, Qorvis, Makers Lab)


(2)   EUR = USD 1.081 on average in H1 2023 vs. USD 1.094 on average in H1 2022
       EUR = GBP 0.877 on average in H1 2023 vs. GBP 0.842 on average in H1 2022

Definitions

Net revenue or Revenue less pass-through costs: Pass-through costs mainly concern production and media activities, as well as various expenses incumbent on clients. These items that can be re-billed to clients do not come within the scope of assessment of operations, net revenue is a more relevant indicator to measure the operational performance of the Groupe’s activities.

Organic growth: Change in net revenue excluding the impact of acquisitions, disposals and currencies.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): Operating margin before depreciation & amortization.

Operating margin: Revenue after personnel costs, other operating expenses (excl. non-current income and expense) and depreciation (excl. amortization of intangibles arising on acquisitions).

Operating margin rate: Operating margin as a percentage of net revenue.

Headline Group Net Income: Net income attributable to the Groupe, after elimination of impairment charges / real estate transformation expenses, amortization of intangibles arising on acquisitions, the main capital gains (or losses) on disposals, change in the fair value of financial assets and the revaluation of earn-out costs.

EPS (Earnings per share): Group net income divided by average number of shares, not diluted.

EPS, diluted (Earnings per share, diluted): Group net income divided by average number of shares, diluted.

Headline EPS, diluted (Headline Earnings per share, diluted): Headline group net income, divided by average number of shares, diluted.

Capex: Net acquisitions of tangible and intangible assets, excluding financial investments and other financial assets.

Free Cash Flow before changes in working capital requirements: Net cash flow from operating activities less interests paid & received, repayment of lease liabilities & related interests and before changes in WCR linked to operating activities

Free Cash Flow: Net cash flow from operating activities less interests paid & received, repayment of lease liabilities & related interests

Net Debt (or financial net debt): Sum of long and short financial debt and associated derivatives, net of treasury and cash equivalents, excluding lease liabilities since 1st January 2018.

Average net debt: Average of monthly net debt at end of month.

Dividend pay-out: Dividend per share / Headline diluted EPS.

Organic Growth vs. 2019: calculated as
([1 + organic growth (n-3)] * [1 + organic growth (n-2)] * [1 + organic growth (n-1)] * [1 + organic growth (n)])-1

Consolidated income statement

(in millions of euros)

 

30
June 30, 2023
(6 months)
(6 months)

30
June 30, 2022
(6 months)
(6 months)

December 31, 2022
(12 months)

Net revenue 8

 

6.318

5,873

12,572

Pass-through revenue

 

787

674

1,624

Revenue

 

7,105

6,547

14,196



Personnel costs
Other operating costs

 

(4,200)
(1,570)

(3,888)
(1,372)

(8,211)
(3,184)

Operating margin before depreciation & amortization

 

1,335

1,287

2,801



Depreciation and amortization
(excluding intangibles from acquisitions)

 

(242)

(269)

(535)

Operating margin

 

1,093

1,018

2,266



Amortization of intangibles from acquisitions



(142)



(137)



(287)

Impairment loss

 

(112)

(44)

(109)

Other non-current income and expenses

 

4

(76)

(103)

 

 

 

 

1,434

Operating income

 

843

761

1,767



Financial expense
Financial income
Cost of net financial debt
Other financial income and expenses
Revaluation of earn-out payments



 

 

 

(59)
101
42
(56)
1

(56)
29
(27)
 (13)
(4)

(118)
101
(17)
(100)
(2)

Pre-tax income of consolidated companies

 

830

717

1,648



Income taxes

 

(205)

(189)

(431)

Net income of consolidated companies

 

625

528

1,217



Share of profit of associates

 

3

5

5

Net income

 

628

533

1,222

Of which:
- Net income attributable to non-controlling
interests

 

5

(4)

-

Net income attributable to equity holders of the parent company

 

623

537

1,222




Per share data (in euros) - Net income attributable
to equity holders of the parent company

 

 

 

 

Number of shares

 

 

250,829,338

 

250,274,576

250,972,110

Earnings per share

 

2.48

2.15

4.87

 

 

 

 

 

Number of diluted shares

 

253,618,058

252,508,128

253,605,167

Diluted earnings per share

 

2.46

2.13

4.82

 

Consolidated statement of comprehensive income

(in millions of euros)

 

June 30, 2023
(6 months)

June 30, 2022
(6 months)

December 31, 2022
(12 months)

Net income for the period (a)

 

628

533

1,222

 

 

 

 

 

 

Comprehensive income that will not be reclassified to income statement

 

 

 

 

 

- Actuarial gains (and losses) on defined benefit plans

 

(6)

91

42

- Deferred taxes on comprehensive income that will not be reclassified to income statement

 

2

(22)

(10)

 

Comprehensive income that may be reclassified to income statement

 

 

 

 

 

- Remeasurement of hedging instruments

 

13

8

(21)

- Consolidation translation adjustments

 

(217)

676

311

Total other comprehensive income (b)

 

(208)

753

322

 

 

 

 

 

Total comprehensive income for the period (a) + (b)

 

420

1,286

1,544

Of which:

 

 

 

 

- Comprehensive income for the period attributable to non-controlling interests

 

(2)

(1)

-

- Comprehensive income for the period attributable to equity holders of the parent company

 

422

1,287

1,544

Consolidated balance sheet

(in millions of euros)

 

June 30, 2023

December 31, 2022

Assets

 

 

 

Goodwill, net

 

12,636

12,546

Intangible assets, net

 

1,094

1,247

Right-of-use assets related to leases

 

1,672

1,753

Property, plant and equipment, net

 

582

610

Deferred tax assets

 

199

186

Investments in associates

 

55

55

Other financial assets

 

351

394

Non-current assets

 

16,589

16,791

Inventories and work-in-progress

 

319

327

Trade receivables

 

10,729

12,089

Contract assets

 

1,451

1,149

Other receivables and current assets

 

930

926

Cash and cash equivalents

 

3,682

4,616

Current assets

 

17,111

19,107

 

 

 

 

Total assets

 

33,700

35,898


Equity and liabilities

 

 

 

Share capital

 

102

102

Additional paid-in capital and retained earnings, Groupe share

 

9,086

9,533

Equity attributable to holders of the parent company – Groupe share

 

9,188

9,635

Non-controlling interests

 

(44)

(35)

Total equity

 

9,144

9,600

Long-term borrowings

 

3,085

2,989

Long-term lease liabilities

 

2,124

2,197

Deferred tax liabilities

 

203

219

Long-term provisions

 

553

504

Non-current liabilities

 

5,965

5,909

Trade payables

 

13,861

15,660

Contract liabilities

 

444

549

Short-term borrowings

 

625

627

Short-term lease liabilities

 

353

360

Income taxes payable

 

328

486

Short-term provisions

 

278

291

Other creditors and current liabilities

 

2,702

2,416

Current liabilities

 

18,591

20,389

 

 

 

 

Total equity and liabilities

 

33,700

35,898

Consolidated statement of cash flows

(in millions of euros)

June 30, 2023
(6 months)

June 30, 2022
(6 months)

December 31,
2022

(12 months)

Cash flow from operating activities

 

 

 

Net income

628

533

1,222

Neutralization of non-cash income and expenses:

 

 

 

Income taxes

205

189

431

Cost of net financial debt

(42)

27

17

Capital losses (gains) on disposal of assets (before tax)

(2)

76

103

Depreciation, amortization and impairment losses

496

450

931

Share-based compensation

41

30

64

Other non-cash income and expenses

51

16

86

Share of profit of associates

(3)

(5)

(5)

Dividends received from associates

2

3

3

Taxes paid

(386)

(251)

(430)

Change in working capital requirements

(1,053)

(858)

(5)

Net cash flows generated by (used in) operating activities (I)

(63)

210

2,417

Cash flow from investing activities

 

 

 

Purchases of property, plant and equipment and intangible assets

(75)

(84)

(198)

Disposals of property, plant and equipment and intangible assets

-

2

4

Purchases of investments and other financial assets, net

(10)

18

11

Acquisitions of subsidiaries

(158)

(400)

(523)

Disposals of subsidiaries

-

(43)

(43)

 

 

 

 

Net cash flows generated by (used in) investing activities (II)

(243)

(507)

(749)

Cash flow from financing activities

 

 

 

Dividends paid to holders of the parent company

-

-

(603)

Dividends paid to non-controlling interests

(7)

(3)

(4)

Proceeds from new borrowings

4

5

-

Repayment of borrowings

-

(10)

(10)

Repayment of lease liabilities

(168)

(170)

(317)

Interest paid on lease liabilities

(39)

(45)

(87)

Interest paid

(86)

(84)

(101)

Interest received

103

21

84

Buy-outs of non-controlling interests

(2)

-

(3)

Net (buybacks)/sales of treasury shares and warrants

(193)

7

41

Net cash flows generated by (used in) financing activities (III)

(388)

(279)

(1,000)



Impact of exchange rate fluctuations (IV)

(239)

258

300


Change in consolidated cash and cash equivalents (I + II + III + IV)

(933)

(318)

968

Cash and cash equivalents on January 1

4,616

3,659

3,659

Bank overdrafts on January 1

(1)

(12)

(12)

Net cash and cash equivalents at beginning of year (V)

4,615

3,647

3,647

Cash and cash equivalents at closing date

3,682

3,342

4,616

Bank overdrafts at closing date

-

(13)

(1)

Net cash and cash equivalents at closing date (VI)

3,682

3,329

4,615

Change in consolidated cash and cash equivalents (VI - V)

(933)

(318)

968

Consolidated statement of changes in equity

Number of outstanding shares

(in millions of euros)

Share capital

 

Additional paid-in
capital

Reserves
and
earnings brought forward

Translation
reserve

 

Fair
value
reserve

Equity attributable
to equity
holders of
the parent company

Non-
controlling interests

Total
equity

 

 

 

251,992,065

December 31, 2022

102

4,037

5,324

85

87

9,635

 (35)

9,600

 

 

Net income

 

 

623

 

 

623

5

628

 

 

Other comprehensive income, net of tax

 

 

 

(210)

9

(201)

(7)

(208)

 

 

Total income and expenses for the period

0

0

623

(210)

9

422

(2)

420

 

-

Dividends

 

(701)

(25)

 

 

(726)

(7)

(733)

 

-

Share-based compensation, net of tax

 

 

50

 

 

50

 

50

 

 

Effect of acquisitions and commitments to buy-out non-controlling interests

 

 

1

 

 

1

 

1

 

-

Equity warrant exercise

 

 

0

 

 

0

 

0

 

(1,490,149)

(Buybacks)/Sales of treasury shares

 

 

(194)

 

 

(194)

 

(194)

 

250,501,916

June 30, 2023

102

3,336

5,779

(125)

96

9,188

(44)

9,144

 


Number of outstanding shares

(in millions of euros)

Share capital

 

Additional paid-in
capital

Reserves
and
earnings brought forward

Translation
reserve

 

Fair
value
reserve

Equity attributable
to equity
holders of
the parent company

Non-
controlling interests

Total
equity

 

 

 

249,600,509

December 31, 2021

101

4,581

4,056

(226)

76

8,588

 (33)

8,555

 

 

Net income

 

 

537

 

 

537

(4)

533

 

 

Other comprehensive income, net of tax

 

 

 

673

77

750

3

753

 

 

Total income and expenses for the period

-

-

537

673

77

1,287

(1)

1,286

 

-

Dividends

 

 

(599)

 

 

(599)

(3)

(602)

 

246,225

Share-based compensation, net of tax

 

 

29

 

 

29

 

29

 

 

Effect of acquisitions and commitments to buy-out non-controlling interests

 

 

2

 

 

2

3

5

 

161,412

Equity warrant exercise

1

3

 

 

 

4

 

4

 

1,116,166

(Buybacks)/Sales of treasury shares

 

 

3

 

 

3

 

3

 

251,124,312

June 30, 2022

102

4,584

4,028

447

153

9,314

(34)

9,280

 

Earnings per share (basic and diluted)

(in millions of euros, except for share data)

 

June 30, 2023

June 30, 2022



Net income used for the calculation of earnings per share

 

 

 

Net income share attributable to equity holders of the parent company

A

623

537

Impact of dilutive instruments:

 

 

 

- Savings in financial expenses related to the conversion of debt instruments, net of tax

 

-

-

Net income – Groupe share – diluted

B

623

537



Number of shares used to calculate earnings per share

 

 

 

Number of shares at January 1

 

254,311,860

253,462,409

Shares created over the period

 

-

133,430

Treasury shares to be deducted (average for the period)

 

(3,482,522)

(3,321,264)

Average number of shares used for the calculation

C

250,829,338

250,274,576

Impact of dilutive instruments:

 

 

 

- Free shares and dilutive stock options

 

2,788,720

2,124,694

- Equity warrants (BSA)

 

-

108,858

Number of diluted shares

D

253,618,058

252,508,128

(in euros)

 

 

 

Earnings per share

A/C

2.48

2.15

 

 

 

 

Diluted earnings per share

B/D

2.46

2.13

Headline earnings per share (basic and diluted)

(in millions of euros, except for share data)

 

June 30, 2023

June 30, 2022



Net income used to calculate headline earnings per share(1)

 

 

 

Net income – Groupe share

 

623

537

Items excluded:

 

 

 

  • Amortization of intangibles from acquisitions, net of tax

 

105

103

  • Impairment loss, net of tax

 

83

33

  • Revaluation of earn-out payments

 

(1)

4

  • Main capital gains and losses on disposal of assets and fair value adjustment of financial assets, net of tax(2)

 

3

50

Headline Groupe net income

E

813

727

Impact of dilutive instruments:

 

 

 

- Savings in financial expenses related to the conversion of debt instruments, net of tax

 

-

-

Headline Groupe net income, diluted

F

813

727

 

 

 

 

Number of shares used to calculate earnings per share

 

 

 

Number of shares at January 1

 

254,311,860

253,462,409

Shares created over the period

 

-

133,430

Treasury shares to be deducted (average for the period)

 

(3,482,522)

(3,321,264)

Average number of shares used for the calculation

C

250,829,338

250,274,576

Impact of dilutive instruments:

 

 

 

- Free shares and dilutive stock options

 

2,788,720

2,124,694

- Equity warrants (BSA)

 

-

108,858

Number of diluted shares

D

253,618,058

252,508,128

 

(in euros)

 

 

 

Headline earnings per share(1)

E/C

3.24

2.90

 

 

 

 

Headline earnings per share – diluted(1)

F/D

3.21

2.88

(1)  EPS after elimination of impairment losses, amortization of intangibles from acquisitions, the main capital gains and losses on disposal and fair value adjustment of financial assets and revaluation of earn-out payments.

(2)  As of June 30, 2023, the main capital gains and losses on disposal amount to euro 4 million and the fair value adjustment of financial assets amounts to euro (7) million. At June 30, 2022, the main capital gains and losses on disposal amount to euro (79) million and the fair value adjustment of financial assets amounts to euro 29 million.


1 Before change in working capital requirements.

2 Reported H1 2023 FCF of €725m includes a €110m cash tax payment made in January 2023 relating to 2022. This payment reflects the impact of the new application of the U.S. Tax Cuts and Jobs Act (TCJA) on the capitalization of R&D expenses, confirmed late December 2022. Excluding this payment, H1 2023 FCF is at €835m, up 17.9% compared to H1 2022.

3 Net income attributable to the Groupe, after elimination of impairment charges, amortization of intangibles arising on acquisitions, the main capital gains (or losses) on disposals, change in the fair value of financial assets, the revaluation of earn-out costs, divided by the average number of shares on a diluted basis

4 Excluding Outdoor Media activities & the Drugstore
5 Excluding Outdoor Media activities and the Drugstore

6 Cancer or serious deseases

7 Based on 1.10 EUR/USD exchange rate

8 Net revenue: Revenue less pass-through costs. Those costs are mainly production & media costs and out-of-pocket expenses. As these items that can be passed on to clients are not included in the scope of analysis of transactions, the net revenue indicator is the most appropriate for measuring the Groupe’s operational performance.

 

Please find the press release here