Publicis Groupe’s Q3 results surprised on the upside with organic growth of 10.3% — the third quarter in a row above 10% — and it raised its annual forecast for the second time this year.
The French agency group expects 2022 revenue growth of about 8.5%, after previously forecasting that it would be between 6% and 7% in July and between 4% and 5% in February — before the start of the war in Ukraine.
The strong performance was ahead of most analysts’ expectations and came despite mounting fears about soaring inflation and a global economic slowdown.
In recognition of the company’s results and the rising cost of living, Publicis said it would pay “an exceptional bonus” worth an extra week’s salary to all staff who are not entitled to variable compensation and have worked at the group for the last 12 months.
The group has set aside about €50 million (about $50 million) for around 45,000 staff — or about half the 90,000-strong workforce.
That means the average payout should be worth about $1,100.
Those employees who are entitled to the extra week’s salary will receive the payment in November in time for the holiday season, including Thanksgiving and Christmas.
Other employees who are entitled to receive an annual bonus as part of their remuneration will have to wait until next March — as is normally the case — following the company’s annual results, which are expected in February 2023.
Arthur Sadoun, the chief executive of Publicis Groupe, said he wanted to say “a big 'merci' to all of our people for their outstanding efforts”.
He explained: “In a context where inflation is impacting the daily lives of many of them, we want to ensure we are giving additional support where it is most needed as we enter the holiday season.
“That is why we are granting next month an additional one-week salary to half of our team members who do not have any variable remuneration and have contributed to everything we have achieved over the past year.”
It is important to support “those of you who are the most impacted by the crisis and inflation in particular”, Sadoun added in a video message to staff.
It is the second time during 2022 that Publicis has paid a bonus to staff who do not receive variable compensation.
About 35,000 employees received a similar payout, worth one week’s salary, in February for their efforts in the previous two years at the same time as other staff received annual variable bonuses.
In addition to bonus payments, Publicis disclosed at its Q3 results that the average salary increase for all staff has been 7% in 2022.
UK was a stand-out performer in Q3
Publicis credited digital consulting arm Publicis Sapient, up 18.1%, and data unit Epsilon, up 13.9%, for driving growth in Q3.
North America was up 11%, Europe 11.1% and Asia Pacific 4.1%.
The UK, which is led by its chief executive, Annette King, was a stand-out performer, up 22.6%, “with strong growth” at Publicis Sapient and “very solid” performances in media and creative.
Sadoun said: “For the third quarter in a row, our model allowed us to deliver double digit growth by once again capturing the evolution in client spend towards first-party data management, digital media and business transformation.”
He went on: “Overall, our results since the beginning of the year mean that today we are in a position to upgrade our full year 2022 guidance for the second time. We are now confident of delivering circa +8.5% organic growth versus +6-7% previously.”
Operating margin should be at the top end of previous expectations at “close to 18%”.
Sadoun added: “Our Q3 numbers are clearly encouraging. But what really stands out is our performance versus pre-pandemic levels. Compared to 2019, we’ve seen our organic growth accelerate to +16% in Q3.
“This demonstrates our ability to more than withstand the ups and downs of the global economy, and makes us confident in our ability to face ongoing macroeconomic uncertainties.”
Organic revenues for the first nine months of the year were up 10.3% at $5.64 billion.
US rival Omnicom reports its Q3 results later today.
Publicis, Omnicom, Interpublic and WPP all previously upgraded their revenue forecasts at their Q2 results as the agency sector has proved resilient.
Publicis Groupe shares rose about 4% in early trading in response to the Q3 results and its new, higher forecast.