Annual profits

Publicis will pay 400 million euros in bonuses “for everyone” after a 75% jump in annual profits | Advertising

Publicis Groupe must pay a “bonus to all those who have been with the company for at least two years, after announcing a 75% increase in annual profits to 1.34 billion euros (1.52 billion dollars) and incomes above pre-pandemic levels.

The French agency group grew organic revenue by 10% in 2021, with no slowdown in the fourth quarter, which grew by 9.3%, despite the new Omicron variant and short-term supply chain problems in sectors such as automotive.

Annual revenue was up 3% on a “two-year stack” from 2019, a key metric for investors as it compares performance with pre-pandemic.

This allowed Publicis to increase its staff bonus pot to 400 million euros, double the level of two years ago.

Arthur Sadoun, Chairman and CEO, said: “In 2021, Publicis published record figures and exceeded 2019 levels on all of its KPIs. [key performance indicators].”

While 2021 was “a rebound year”, after the 2020 coronavirus crisis, Publicis “was able to recover faster and stronger than expected” thanks to its integrated “Power of One” model and move towards a first-party data management, digital media, commerce and business transformation, the company said.

Data unit Epsilon grew 12.8% and consulting arm 13.8% in 2021.

Publicis also highlighted its new business record, winning major media accounts such as Stellantis, Meta and McDonald’s in the US and topping JP Morgan’s new business table for major global agency groups.

North America was the best performer, up 9.7% from 2020 and 7% from 2019. Europe was up 9.6% from 2020 but still down 4% compared to 2019. Asia-Pacific increased by 10.3% compared to 2020 and 3% compared to 2019.

“A bounty for everyone”

Sadoun said Publicis will pay “a bonus to all those” who have been with the group for two years to thank them for their “dedication since the beginning of the crisis” and their “exceptional efforts”.

Thousands of employees out of the 85,000 employees are entitled to annual bonuses. In addition, 35,000 employees who have been with the company since at least January 2020 and do not normally receive any variable remuneration will be paid an additional week’s salary, which equates to around €1,000 per head on average.

This follows Publicis’ decision in its annual results a year ago to repay all salary sacrifices staff had made during the worst of the crisis, when some high earners gave up 20% of their salary until six months in 2020. .

Sadoun was optimistic about 2022, as Publicis expects revenue growth of between 4% and 5%, considerably higher than in the years before the pandemic, when its growth rates were subdued.

As a sign of confidence, Publicis said it would also increase the amount of profits it pays out as an annual dividend from 45% to 50%.

The company has not announced any share buybacks, despite predictions from some analysts that Publicis may follow rivals such as WPP and Omnicom by buying its own shares, a strategy that can drive the stock price higher.

The reaction of analysts

Barclays said: “These are good results and the guidance for FY22E is very strong. This should convince some investors that agencies are more than a cheap short-term cyclical trade and that there is a long-term structural argument that they can return to 3%+ organic. [growth]having restructured their historical services and invested in new areas of growth.

Goldman Sachs said, “We believe the results will be seen as positive and further validate the company’s strategic shift towards data-driven marketing and digital transformation. We are also seeing positive cross-reading for other agencies, particularly WPP.

Publicis is the first of the four major global agency groups to publish its annual results. Along with Interpublic and WPP, it was among the top performers in terms of revenue growth in the first nine months of 2021 compared to pre-pandemic levels.