Arthur Sadoun Presents Publicis Groupe's 2017 Annual Results to Euro Business Media

Well, I guess the least that we can say is that 2017 has been a challenging year for our industries. I won't come back to everything that has happened because it would take two hours of your time, which you don't have. I do, but you don't. I will just tell you that at Publicis we are focused on two things: delivering and transforming. And actually, delivering while transforming, making sure that we have robust numbers, and at the same time accelerate our transformation to actually be in line with the needs of our clients.

When you look at our financial results, the first thing you need to look very closely at is organic growth and how we can bring sequential improvement in organic growth. We started the year in Q1 at -1.2 percent. We then moved into Q2 with a progression to +0.8%. Q3 was at +1.2 percent, and we actually delivered in Q4 +2.2 percent. We said very clearly in Q3 that you would see an improvement and sequential improvement from H1 to H2. This is what we are delivering with an annual growth of 0.8 percent, which is actually better than last year.

I've got to mention the U.S. We had a very good Q4. We moved to +4.5% in Q4, coming from 3.5% in Q3. This is extremely important for us, not only because the U.S. is 50% of our business, but because it is a place where our transformation has been starting now for the last two years, and you can already see some very positive benefits. It is a very good sign that it was the right dynamic.

I mean, we said very clearly that we have to accelerate on organic growth, but at the same time, as some will say, we need to bring our cost base down and gain in terms of competitiveness. We are delivering in 2017 40 basis points of improvement on our margin at comparable restructuring costs, which means that we are at 15.5% profit, which is for us a good number because it was important for us to demonstrate our ability to increase our margin while we are having very reasonable growth. The good news about that is that today Publicis is more solid than it was a year ago, and a demonstration of that is that we have decided to increase our dividend to two euros, which is an increase of plus 8.1 percent compared to last year.

If you look at our clients, they are facing several disruptions, and we have a very simple vision. We think that we can be the market leader in marketing and business transformation. We can be the one that helps our client not only transform the marketing by reinventing the consumer journey, but also help them to understand what in the business model needs to be transformed through technology to be more efficient. This is what we are bringing today to a client on a day-to-day basis, and this is starting to make a huge difference in the value we bring to them. And by the way, the way we get organized...

I mean, I'm not going to tell you that everything is perfect and that we are already at the end of our journey. We are actually at the beginning, but we are seeing very encouraging results. At a time where our industry is being challenged, we see great signs of attractiveness, which is extremely important. We need to be attractive with talent but also with clients. Our first priority is to retain and train our best talent, but at the time of transformation, bringing new talent on board is absolutely critical. And if you look at the list of people that have joined Publicis during this year to follow the model and the project, it's a great sign of how we can be attractive in a highly competitive talent market. One example: Nick Law, who was the chief creative officer of R/GA globally, is joining Publicis to do the same at group level. He is considered one of the most iconic creatives when it comes to the alchemy between creativity and technology. Attracting this kind of talent means that at Publicis we are on the right track to reinvent our industry. The second factor is new business. I'm not going to give you the list of everything we have going on, it would take time. We have lost some by the way, but we have won more than we lost. What is important to note is that we have been winning on the marketing side: Southwest Airlines, for example, and LG in the U.S., the P&G pitch in the UK which was the pitch of the year, and great work with Royal also, and on the creative front with Desire. But we have also been winning on digital business transformation. You may have heard about McDonald's that we won with Capgemini. There are other wins that were important for us, but one more significant in the recent two weeks, maybe because it's French but also because the challenger is incredibly strong, is Carrefour. We have been lucky enough to be chosen by Carrefour to help them in their digital business transformation, reinventing their omni-channel model. What is interesting is the reason why we were chosen: obviously because we are very strong in consulting and technology, but also because we understand the brand and the consumer, and we can make sure that we do this transformation in a connected way.

There is a short-term future and the midterm. The short-term is definitely the investor day on the 20th of March, where we will review a target for growth and profits, while the 2013 objective would have to be revisited down. As all the market knows, it is important for me to share already two good news. The first is when it comes to growth: because we have invested in data, technology, and talent, we are committed to deliver in 2018 a better growth than 2017. It is an achievement in the context, and by the way when you look at what the competition is saying, it is something that we believe will be a strong sign of the fact that we are progressing with our model. The second good news is on profits. As I told you, we are very serious and committed about the reduction of our cost, not only because we need to reinvest – whether it be in data or in talent – but also because we want to make sure that we put in place a multi-year program to reduce our cost and increase the margin, and those progress will be felt already in 2018.

I have to admit that I'm pretty confident on the midterm for three reasons. I think that we have three very strong competitive advantages. The first is technology. Thanks to Publicis Sapient, we can bring digital business transformation to all of our clients. That really changes the kind of relationship and value we are bringing through the addition that I just mentioned between marketing transformation and digital business transformation. The second is the power of 'one' – our ability to break the silos as we did is really paying off. Look at what is happening in the US, and it is giving us a huge advantage to arrive with an end-to-end solution for each of our clients. And the third is our people. As you know, we have been through a transition phase with Maurice Lévy becoming the Chairman of the Supervisory Board and me as the CEO of the Executive Board. We have put in place governance that is working very well together, and I think that we are the team for the future. And by the way, I will use this opportunity to thank them because as I said, they have been doing a terrific job, and we are extremely confident for the future, even though it won't be easy. But that is the name of the game.

Yeah, thank you very much. Sorry for the weather.