Publicis Groupe Annual Results - 2006.Strong Performance in All AreasPARIS Paris, in Greek mythology Paris or Alexander, in Greek mythology, son of Priam and Hecuba and brother of Hector. Because it was prophesied that he would cause the destruction of Troy, Paris was abandoned on Mt. , February 28 /PRNewswire-FirstCall/ -- - Operating margin: 16.3%, +60 bp - Revenue: EUR4,386 million, +6.3% - Organic growth: +5.6% - Net income excluding minorities: EUR443 million, +15% - Free cash flow: EUR544 million, +14% - Average net debt: EUR636 million, down 31% - Diluted Headline EPS: EUR2.01, +24% - Dividend: EUR0.50, +39% Commenting on these results, Publicis Groupe Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Maurice Levy Maurice Levy may refer to:
"Publicis Groupe teams have not only kept all their commitments, but -once again-surpassed them. Our 2006 results are further confirmation of the effectiveness of the strategy we have pursued over recent years. Strong organic growth and net new business are especially satisfactory as they follow the extraordinary records set in 2005. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: came in at 16.3% of revenue, a record high for our industry, while vigorous cash generation resulted in free cash flow of over EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 500 million. The strength of our financial performance has allowed Publicis Groupe to engage in major strategic moves, notably marked by the acquisition of Digitas. This vaults us to a leading global position in digital and interactive communications. Beyond the performance of the Digitas business itself, this new segment will be a driver for future growth through additions to our worldwide offering and consolidation of our strengths as a world leader in media services and healthcare communications. Finally, we are well placed to make the most of robust growth in emerging markets, where we will be continuing acquisitions as opportunities arise. The bulk of our revenue is now drawn from segments where growth is significantly higher than in the worldwide advertising market. I am thus confident about the future of our Groupe, and in particular about the 2007 fiscal year." A dividend of EUR0.50 per share, 39% higher than that distributed in 2006, will be submitted for the approval of shareholders at the General Meeting to be held at 10 a.m. on Monday, June 4, 2007. Maurice Levy, Chairman and CEO, presented the financial statements and management report for 2006 to the Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. of Publicis Groupe at its meeting presided by Elisabeth Badinter on February 27, 2007.
Key figures, EUR millions
2005 2006 Rise
Revenue 4, 127 4, 386 + 5.6%
(organic)
Operating margin before 765 820 +7 %
depreciation and
amortization
As a % of revenue 18.5% 18.7%
Operating margin 649 713 +10%
As a % of revenue 15.7% 16.3%
Net income excluding 386 443 + 15%
minority interests
Diluted Headline EPS EUR1.62 EUR2.01 + 24%
Proposed dividend per share EUR0.36 EUR0.50 + 39%
I. Highlights of 2006
- Firm organic growth
2006 revenue of EUR4,386 million were up 5.6% at constant scope of consolidation and exchange rates (i.e., organic growth), a solid and sustained increase. Significantly, all geographical regions contributed, with organic growth 5% in Europe, 5.1% in North America, 5.3% in the Asia-Pacific area, 9.3% in Latin America and 20% in Africa-Middle East. - Satisfactory performance in net new business Net new business won in 2006 came to $3.3 billion, with new accounts including Renault (extension to seven new markets in Latin America and the Baltic countries), Sanofi -Aventis/Pasteur Vaccines (global) Orange (Europe), Marriott (Asia), Kraft (marketing services, Europe), JC Penney (US), Wal-Mart (in-store marketing, US), Sony Ericsson (global) and Crowne Plaza Hotels & Resorts (US) in advertising and SAMS SAMS Scottish Association for Marine Science SAMS Space Acceleration Measurement System SAMS South American Missionary Society (of the Episcopal Church, Inc) SAMS School of Advanced Military Studies (US Army) sectors, while in media buying and consultancy they included Washington Mutual (US), Oracle (global), Avaya (global), Del Monte (Europe) and Beam Global Spirits & Wine (global). - Operating margin sets new record Operating margin increased to 16.3% -- the strongest showing in the entire industry, representing a rise of 60 basis points from 2005 level of 15.7%. This exceeded our targets, and reflects an overall reduction in Groupe operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. associated with rationalization of structures and a decline in depreciation and amortization charges. The rise was achieved despite an additional EUR28 million charge for Sarbanes-Oxley compliance. Progress on the Horizon Program for the rationalization of business structures across units continued during the year. - Net income up 14.8% Net income increased 14.8% to EUR443 million in 2006, while headline net income rose an even stronger 28% to EUR452 million. This performance was essentially attributable to vigorous improvement in operating margin and a steep EUR42 million reduction in net interest and related expense. At the same time, reorganization of the Groupe's legal structure and a reduction in the number of entities helped to bring the effective tax rate down from 32% to 30.2%, meeting the Groupe's target one year ahead of schedule. - Diluted Headline EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. up 24% Diluted headline EPS increased 24% to EUR2.01 in 2006, while diluted EPS rose 12% from EUR1.76 to EUR1.97. - Further steep decline in average net debt The Groupe's average net debt in 2006 was cut by a third, to EUR636 million. This was achieved on top of the EUR200 million paid out for the redemption of 80% of the equity warrants issued in connection with the Bcom3 acquisition in 2002. The ratio of net debt to equity was unchanged from the end of the previous year at 0.10. - Free cash flow over EUR500 million As already announced, the Groupe continued its Focus on Cash program to generate free cash flow of EUR544 million before changes in working capital requirement. This strong performance, a 13.8% increase over 2005 levels, reflects strong growth in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and tight control of capital expenditure. It demonstrates the Groupe's ability to consistently generate free cash flow of at least EUR400 million to EUR500 million a year before changes in working capital requirement. - Steep dividend Increase of 39% The proposed dividend to be submitted to shareholders at the General Meeting on June 4 is EUR0.50 per share, 39% more than in 2005, and setting the payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. at 24%. The dividend will be made payable on July 4, 2007. II. Strategy and outlook - A major strategic move into digital/interactive communications Digital communications generally and interactive communications in particular are now omnipresent om·ni·pres·ent adj. Present everywhere simultaneously. [Medieval Latin omnipres in consumers' daily lives, creating new challenges and opportunities for local and global brands. To help clients meet these challenges, Publicis Groupe has made winning a leading position in digital communications worldwide a top strategic priority. This means integrating digital capabilities at every level of the Groupe's activities, with action focused on: - Acquisitions to accelerate worldwide deployment of business strength and expertise - Bolstering support for in-house development of new highly innovative competencies - Deriving 25% of total revenue from digital, interactive and mobile activities by 2010 - Digitas acquisition-the cornerstone for the construction of Publicis Groupe' worldwide digital offering The acquisition of Digitas finalized at the end of January 2007, gives Publicis Groupe an ideal base for expansion in digital communications, and will provide critical expertise for the Groupe's holistic offering around the world. Under the leadership of David Kenny, Digitas CEO and a member of the Publicis Groupe Executive Committee, worldwide growth in digital and interactive business will be driven by: - Training and recruitment of new digital talent - An active policy of targeted acquisitions, particularly in Europe and Asia. - Consolidating leadership in media agencies, a key strength for expansion in digital communications Publicis Groupe has successfully anticipated the shift to digital communications in an increasingly complex and fragmented media landscape. In line with this trend, consultancy services account for a growing proportion of the Groupe's media revenue, reflecting the need for highly specialized expertise as information flows take ever more varied routes. In addition to ongoing investment in proprietary resources, Publicis Groupe's media businesses are continuing to expand in digital communications through innovative entities such as Denuo, Moxie interactive or Pole Nord. Media agencies now represent 26% of Groupe revenue and is set for further strong growth. An unprecedented amount of new business won at the beginning of 2007, including Wal-Mart, Fox Entertainment and Wendy's, is further reinforcing Publicis Groupe's global lead in media buying and consultancy. - Healthcare communications reinforce digital offerings Operating in a segment where demand for digital and interactive marketing services is particularly strong, Publicis Healthcare Communications Group (PHCG PHCG Paint Horse Club Germany eV ) has consolidated its position as global leader in healthcare communications. The already sizeable digital component in the PHCG offering will be further reinforced by leveraging the capabilities of Digitas and its Medical Broadcasting Company (MBC (Multimedia Benchmark Committee) A graphics benchmark that provides MPEG-2 and other tests. See GPC. ) agency. This will lead to new and innovative responses to the needs of large pharmaceutical firms, which continue to drive demand. PHCG intends to further strengthen the competitive advantages of its global leadership in the sector through pursuing targeted acquisitions. - Growth in emerging markets continues With growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. double the Groupe average, our activities in emerging markets are a powerful driver for Publicis Groupe. This presence is marked by: - 15,000 staff members, representing nearly all Group competencies - Strong market positions in China, Russia, Turkey, Mexico and Brazil. Publicis Groupe aims to accelerate growth in these markets through the pursuit of targeted acquisitions focusing on marketing services, healthcare communications and interactive communications, Publicis Groupe aims to generate 25% of its annual revenue in emerging markets by 2010. III. Outlook for 2007 - A promising start for the year in net new business Net new business booked in January alone totalled almost $2 billion, the strongest start of a year in the Groupe's history. - Favorable growth prospects As already announced on publication of 2006 revenue, the growth of business in Europe and the US should be comparable to levels recorded in 2006, while growth in emerging markets is expected to show further acceleration in 2007. - 2008 operating margin target confirmed Following a renewed rise in 2006, Publicis Groupe confirms its target for operating margin rate at 16.7%, including allowance for the impact of the Digitas acquisition, in 2008. Publicis Groupe (Euronext Paris: FR0000130577 and NYSE NYSE See: New York Stock Exchange : PUB) is the world's fourth largest communications group, as well as world's second largest media counsel and buying group. Its activities span 104 countries on five continents. The Groupe's communication activities cover advertising, through three autonomous global advertising networks: Leo Burnett, Publicis, Saatchi & Saatchi, as well as through its two multi-hub networks Fallon Worldwide and 49%-owned Bartle Bogle Hegarty Bartle Bogle Hegarty (BBH) is a British advertising agency, responsible for some of the more notable advertising campaigns of the last twenty years. The company was founded by John Bartle, Nigel Bogle & John Hegarty in 1982. ; media consultancy and buying through two worldwide networks ZenithOptimedia and Starcom MediaVest Group; and marketing services and specialized communications including direct marketing, public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most , corporate and financial communications, event communications, multicultural and healthcare communications with a worldwide leadership.
Web sites: http://www.publicisgroupe.com/ and http://www.finance.publicisgroupe.com/
Publicis Groupe Contacts:
Pierre Benaich, Investor Relations: +33-1-44-43-65-00
Eve Magnant, Corporate Communications: +33-1-44-43-70-25
CONTACT: Publicis Groupe Contacts: Pierre Benaich, Investor Relations Investor relations The process by which the corporation communicates with its investors. : +33-1-44-43-65-00, Eve Magnant, Corporate Communications: +33-1-44-43-70-25 |
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