(Update: analyst comment, share price)
PARIS (Agefi-Dow Jones). Advertising group Publicis on Thursday raised its overall forecast for 2022 after posting record results that topped analysts’ forecasts in the first half of the year.
In response, Publicis shares rose 3.8% to €48.90 around 11:00 am.
For the current fiscal year, Publicis executives expect organic net income growth of 6% to 7%, operating margins of 17.5% to 18%, and available cash flow of at least €1.5 billion. They previously forecast 2022 organic net growth in the upper range between 4% and 5%, an operating margin rate of around 17.5% and free cash flow of €1.4 billion.
Publicis has upped its ambitions for the current fiscal year because the group has “better visibility in the second half” while at the same time seeing itself as “capable of handling all uncertainties” due to its “flexibility in the face of costs”. , – explained Arthur Sadun, president of the advertising council, during a conference with journalists.
Managers’ confidence in the future is also based on the sustainable commercial development of the company. Since the beginning of the year, Publicis has notably won the media budgets of McDonald’s and KFC in the US, LVMH in Europe, Pepsi in China and Nestlé in India.
Popular “protective” profile
Publicis also notes the continuation of the recovery of its activities in the second quarter. For the period from April to June, its net income was 3.07 billion euros, up 21% on published data and 10.3% on organic data.
“This performance, compared to already very strong growth in Q2 2021 (+17.1%), is driven by very strong organic growth in all our regions, especially in the US (+10.1%), Europe (+10.1%) %). ) and in Asia (+6.5%), with China, which continues to grow despite the restrictions (+2.7%),” commented Artur Sadun.
“Publicis Sapient and Epsilon, which account for a third of our revenue, continued to grow at 19.1% and 13.7% respectively, demonstrating our ability to track the evolution of our clients’ investments in data, technology and digital transformation. ” added the manager.
In April, Publicis said it expects organic net income growth of about 5% in the second quarter, while analysts had expected it at 5.4%, according to a consensus provided by the company. Comfortably beating analyst consensus in the second quarter, Publicis has shown a “defensive” profile that justifies a revaluation of its shares in the stock market, Citi comments. The intermediary recommends a “buy” price and aims for 80 euros.
External Growth Policy Confirmed
With this strong second quarter, Publicis posted a record high in the first half of the year. Between January and June, its net income jumped 10.4% organically to €5.87 billion, supported by Europe (+12.3%), North America (+9.3%) and Asia Pacific ( +10.1%). Analysts had expected 8% organic growth over the period.
Operating margins for the first half were 17.3%, up 80 bps YoY and 110 bps above financial intermediaries’ forecasts. This figure rose to 19.2% in North America and peaked at 20.9% in Asia Pacific.
Operating earnings per share increased by 29.1% in the first half to 2.88 euros.
Thanks to the increase in its results, Publicis recorded a 17 percent increase in its semi-annual free cash flow before changes in working capital to 708 million euros.
On a balance sheet level, the advertiser’s net debt was €464m as at 30 June 2022, compared to a net debt of €76m as at 31 December 2021. The group’s average net debt over the 12 rolling months was €1.02bn . in the first half of the year against 2.25 billion euros a year earlier.
In this context, Publicis has reaffirmed 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,” said Artur Sadun.
-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 AM ET (09:01 GMT)