Gideon Spanier
Feb 3, 2022

Publicis to pay €400m in bonuses ‘for everyone’ after annual profits jump 75%

Analysts say results “validate” the company’s strategic shift to data-driven marketing and digital transformation.

Publicis to pay €400m in bonuses ‘for everyone’ after annual profits jump 75%

Publicis Groupe is to pay a “bonus for everyone” who has worked at the company for at least two years, after reporting a 75% jump in annual profits to €1.34 billion ($1.52 billion) and revenues back above pre-pandemic levels.

The French agency group increased organic revenues by 10% in 2021, with no slowdown in Q4, which was up 9.3%, despite the new Omicron variant and short-term supply-chain issues in sectors such as automotive.

Annual revenues were up 3% on a “two-year stack” basis compared to 2019—a key metric for investors because it compares performance with before the pandemic.

That has allowed Publicis to increase its staff bonus pot to €400m, which is double the level of two years ago.

Arthur Sadoun, the chairman and chief executive, said: “In 2021, Publicis published record numbers and exceeded 2019 levels across all of its KPIs [key performance indicators].”

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

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

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

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

“A bonus for everyone”

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

Thousands of employees out of the 85,000-strong workforce are entitled to annual bonuses. In addition, 35,000 employees who have worked at the company since at least January 2020 and normally receive no variable compensation will be paid an extra week’s salary, which is equivalent to about €1,000 per head on average.

That follows the decision by Publicis at its annual results a year ago to re-pay all the salary sacrifices that staff had made during the worst of the crisis, when some higher earners gave up 20% of their pay for up to 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 muted.

In a sign of confidence, Publicis said it will also increase the amount of profit that it pays out in annual dividend from 45% to 50%.

The company did not announce any share buyback, despite predictions by some analysts that Publicis might follow rivals such as WPP and Omnicom by buying its own stock—a strategy that can boost the share price.

Analysts’ reaction 

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

Goldman Sachs said: “We believe the results will be taken positively and further validate the company’s strategic shift to data-driven marketing and digital transformation. We also see a positive read-across for other agencies, particularly WPP.”

Publicis is the first of the big four global agency groups to report full-year results. Along with Interpublic and WPP, it was among the best performers in terms of revenue growth during the first nine months of 2021 when compared to pre-pandemic levels.

Source:
Campaign UK

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