(Update: analyst comment, share price)
PARIS (Agefi-Dow Jones) – Advertising group Publicis raised its overall forecast for 2022 on Thursday after posting record results and beating analysts’ forecasts in the first half of the year.
In response, Publicis shares rose 3.8% to 48.90 euros around 11:00 a.m.
For the current fiscal year, Publicis executives expect organic net profit growth of 6% to 7%, operating margin rates of 17.5% to 18%, and free cash flow of at least 1.5 billion euros. They previously forecast 2022 organic net profit growth in the upper range of between 4% and 5%, an operating margin rate of around 17.5% and free cash flow of 1.4 billion euros.
Publicis raised its ambitions for the current financial year as the group has “better visibility in the second half” and at the same time sees itself as “capable of dealing with all uncertainties” thanks to its “flexibility in spending conditions”. , – explained the president of the Advertising Council, Artur Sadun, during a conference with journalists.
Managers’ confidence in the future is also based on the company’s strong commercial momentum. Since the beginning of the year, Publicis has won the media budgets of McDonald’s and KFC in the United States, LVMH in Europe, Pepsi in China and Nestlé in India.
Popular “protective” profile
Publicis also noted the continued recovery of its operations in the second quarter. For the period from April to June, its net profit was €3.07 billion, up 21% on a reported basis and up 10.3% on an organic basis.
“These figures, compared to the already very strong growth in the second quarter of 2021 (+17.1%), are the result of very strong organic growth in all our regions, particularly in the United States (+10.1%), in Europe (+ 10.1%) ) and in Asia (+6.5%), with China continuing to grow despite the restrictions (+2.7%)”, Artur Sadun commented.
“Publicis Sapient and Epsilon, which account for a third of our revenues, continued to accelerate at 19.1% and 13.7% respectively, confirming our ability to embrace our clients’ evolving investments in data, technology and digital transformation. “, the manager added.
In April, Publicis said it expected organic net profit to grow about 5% in the second quarter, compared with analysts’ expectations of 5.4%, according to the consensus provided by the company. Comfortably beating analysts’ consensus in the second quarter, Publicis demonstrated its “defensive” profile, justifying its stock market revaluation, Citi said. The broker recommends a “buy” price and targets EUR 80.
The foreign policy of growth is confirmed
With this strong second quarter, Publicis posted record first-half results. Between January and June, its net profit jumped 10.4% in organic data to €5.87 billion, supported by Europe (+12.3%), North America (+9.3%) and Asia Pacific ( +10.1%). Analysts expected an organic growth rate of 8% for the period.
The operating margin rate was 17.3% in the first half of the year, which is 80 basis points higher than the year and 110 basis points higher than the forecasts of financial intermediaries. This increased to 19.2% in North America and peaked at 20.9% in Asia Pacific.
Current earnings per share increased by 29.1% in the first half to EUR 2.88.
Thanks to the increase in results, Publicis recorded a 17% increase in half-year free cash flow to €708m before working capital changes.
At the balance sheet level, the advertiser had net debt of €464 million as of June 30, 2022, compared to net debt of €76 million as of December 31, 2021. The group’s average net debt for the 12 current months was €1.02 billion in the first half, compared with €2.25 billion a year earlier.
In this context, Publicis confirmed its desire to make new acquisitions this year worth between 400 million and 600 million euros, and “most likely at the top of that range”, Artur Sadun said.
-Dimitri Delmond, Agefi-Dow Jones; +33 (0)1 41 27 47 31; [email protected] editor: ECH – VLV
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July 21, 2022 05:01 ET (09:01 GMT)