Publicis Groupe Sa · EURONEXT:PUB
Publicis Groupe Sa — FY2017 Earnings Presentation
49 slides from Publicis Groupe Sa's earnings presentation, February 2018
Slide 1: Full Year 2017 Results
FULL YEAR 2017 RESULTS FEBRUARY 2018
Slide 2: Disclaimer
DISCLAIMER Certain information contained in this document, other than historical information, may constitute forward-looking statements or unaudited financial forecasts. These forward-looking statements and forecasts are subject to risks and uncertainties that could cause actual results to differ ma
Slide 3: 2017 Highlights
ge PUBLICIS GROUPE 2017 HIGHLIGHTS
Slide 4: Delivering while transforming
Delivering while transforming 4
Slide 5: 2017: We delivered
PUBLICIS GROUPE 2017: 2% ~ < — — : WEDELIVERED | ——s—ste
Slide 6: We delivered
WE DELIVERED Continued sequential improvement in organic growth: +2.2% in Q4 − Confirmed recovery in the US: +4.5% in Q4, after +3.5% in Q3 +2.2% − FY 2017 organic growth of +0.8% +1.2% +0.8% Operating margin rate of 15.5% up 40 basis points at constant restructuring charge − Operating margin of €1,
Slide 7: 2017 Results
gt PUBLICIS GROUPE 2017 RESULTS
Slide 8: Q4 and Full Year Revenue
Q4 AND FULL YEAR REVENUE (EUR million) Q1 Q2 Q3 Q4 YTD 2017 REVENUE 2,328 2,515 2,264 2,583 9,690 2016 REVENUE 2,291 2,462 2,315 2,665 9,733 Reported growth +1.6% +2.2% -2.2% -3.1% -0.4% Growth at constant currencies -0.6% +1.1% +1.9% +2.7% +1.3% Organic growth -1.2% +0.8% +1.2% +2.2% +0.8% 8
Slide 9: Q4 2017 Revenue by Geography
Q4 2017 REVENUE BY GEOGRAPHY Q4 2017 Organic (EUR million) Q4 2017 Q4 2016 vs. Q4 2016 growth Europe 755 768 -1.7% -1.8% North America 1,308 1,362 -4.0% +4.4% Asia Pacific 304 321 -5.3% -0.4% Latin America 127 124 +2.4% +8.7% Middle East Africa 89 90 -1.1% +6.4% Total 2,583 2,665 -3.1% +2.2% 9
Slide 10: 2017 Revenue by Geography
2017 REVENUE BY GEOGRAPHY 2017 Organic H1 organic H2 organic (EUR million) 2017 2016 vs. 2016 growth growth growth Europe 2,758 2,760 -0.1% +1.3% +4.3% -1.6% North America 5,187 5,236 -0.9% +0.5% -2.4% +3.7% Asia Pacific 1,060 1,085 -2.3% -1.5% -1.4% -1.6% Latin America 389 365 +6.6% +4.8% +3.5% +5.
Slide 11: 2017 Organic Growth by Country
2017 ORGANIC GROWTH BY COUNTRY > +10% Argentina, Chile, Russia, Turkey, Vietnam Australia, India, Israel, South Korea, +5% to +10% Mexico, UK, United Arab Emirates Brazil, France, Italy, Netherlands, 0 to +5% Singapore, South Africa, Switzerland, USA Belgium, Canada, China, Germany, < 0% Japan, Mala
Slide 12: Anonymous Letter
ANONYMOUS LETTER An anonymous letter was sent to Publicis Groupe’s auditors and some financial analysts, claiming that Publicis Groupe anticipated the application of IFRS15 to boost organic growth This assertion is wrong: Publicis Groupe has not anticipated application of IFRS 15 As the anonymou
Slide 13: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT 2017 (EUR million) 2017 2016 vs. 2016 Revenue 9,690 9,733 -0.4% EBITDA (1) 1,666 1,682 Operating margin 1,505 1,516 -0.7% Non-current income and expenses (1) 12 Net financial income (expenses) (61) (74) Income taxes (391) (427) Consolidated Headline Net Income 1,052 1,0
Slide 14: Operating Margin
OPERATING MARGIN (EUR million) 2017 2016 Revenue 9,690 9,733 Personnel costs (excl. restructuring costs) (5,857) (5,986) Restructuring costs (120) (73) Other operating expenses (2,047) (1,992) Depreciation (161) (166) Operating margin 1,505 1,516 As a % of revenue 15.5% 15.6% 14
Slide 15: Change in Operating Margin as a % of Revenue
CHANGE IN OPERATING MARGIN AS A % OF REVENUE +30bp -20bp -20bp +70bp 15.6% 0bp 15.6% -20bp -50bp 15.5% 15.1% FX and Additional Freelance Other IT New business Other 2016 acquisition 2016 restructuring 2016 costs personnel projects costs G&A 2017 at 2017 at comparable reported impacts FX and perimete
Slide 16: Net Financial Income (Expenses)
NET FINANCIAL INCOME (EXPENSES) (EUR million) 2017 2016 2017 vs. 2016 2020 BNP Paribas loan, 2021 & 2024 Eurobond, 2023 Eurobond (60) (61) 1 Other financial expense net of interest income 28 7 21 Discount on long term debt (earn-out and finance leases) (19) (20) 1 Interest on net financial debt (51)
Slide 17: Income Tax and Effective Tax Rate
INCOME TAX AND EFFECTIVE TAX RATE (EUR million) 2017 2016 Reported income taxes 312 342 Impact of US tax reform: 61 Toll Charge on reserves accumulated by subsidiaries (139) Deferred tax credit 200 Adjusted income taxes 373 342 Effective tax rate 27.2% 29.0% Income tax on Amortization of intangibles
Slide 18: Headline Earnings per Share, Diluted
HEADLINE EARNINGS PER SHARE, DILUTED (1) €4.50 +0.9% +1.6% €4.46 €4.39 2015 2016 2017 (1) See definition in Supplemental Information 18
Slide 19: Proposed Dividend of €2.00 per Share
PROPOSED DIVIDEND OF €2.00 PER SHARE €1.85 €2.00 +8.1% +15.6% €1.60 44.4% 41.5% Dividend 36.4% pay-out (1) 2015 2016 2017 2017 dividend to be submitted to May 30, 2018 AGM’s approval Option for dividend in cash or shares (1) See definition in Supplemental Information 19
Slide 20: Sustained increase in dividend and pay-out ratio
PROPOSED DIVIDEND OF €2.00 IN 2017, LEADING TO 44.4% DIVIDEND PAY-OUT (1) (2) 60.0% 2.00 €2.00 €1.85 50.0% €1.60 1.00 €1.10 €1.20 40.0% Sustained €0.90 increase in 44.4% €0.70 36.4% 41.5% 30.0% dividend and 33.0% 26.4% 28.1% 31.1% pay-out ratio 0.00 20.0% 2011 2012 2013 2014 2015 2016 2017 (1) To be
Slide 21: Free Cash Flow
FREE CASH FLOW 2017 (EUR million) 2017 2016 vs. 2016 EBITDA (1) 1,666 1,682 Interest paid (38) (66) Tax paid (264) (257) Other items 54 68 Cash flows from operations before change in WCR 1,418 1,427 Capex, net of disposals (1) (131) (166) Free Cash Flow before change in WCR 1,287 1,261 +2.1% (1) See
Slide 22: Use of Cash
USE OF CASH (EUR million) 2017 2016 Free Cash Flow before change in WCR 1,287 1,261 Change in WCR 69 (355) Acquisitions (net of disposals) (57) (65) Earn-out (232) (198) Buy-out (32) (28) Dividends paid (180) (213) Share buy-back, net of sales (337) 4 Sales of treasury shares due to exercise of stoc
Slide 23: Balance Sheet
BALANCE SHEET (EUR million) Dec. 31, 2017 Dec. 31, 2016 Goodwill and intangibles 9,574 10,495 Other fixed assets 824 910 Current and deferred tax (400) (494) Working capital (2,661) (2,916) Net assets held for sale 46 - TOTAL 7,383 7,995 Group equity 5,956 6,055 Minority interests 2 10 TOTAL EQUITY
Slide 24: Net Debt / (Net Cash)
NET DEBT / (NET CASH) (EUR million) 2017 2016 2015 Net Debt (Net Cash), average 1,980 2,385 2,429 Net Debt (Net Cash), at end of period 727 1,244 1,872 24
Slide 25: Financial Ratios
FINANCIAL RATIOS Internal 2017 2016 objectives Average net debt / EBITDA (1) 1.2x 1.4x < 1.5x Net Debt / Shareholders’ Equity 0.12x 0.21x < 0.50x Interest Cover (2) 33x 23x > 7x (1) See definitions in Supplemental Information (2) EBITDA / Cost of Net Financial Debt 25
Slide 26: Liquidity as of December 31, 2017
LIQUIDITY AS OF DECEMBER 31, 2017 (EUR million) TOTAL DRAWN AVAILABLE Committed Facilities 364-day revolving credit facilities 228 - 228 5-year revolving credit facility (1) 450 - 450 5-year syndicated facility (Club Deal) (2) 2,000 - 2,000 Total Committed Facilities 2,678 - 2,678 Cash and Marketabl
Slide 27: 2017: We are transforming
ge PUBLICIS GROUPE 2017: WE ARE | TRANSFORMING
Slide 28: Our ambition: become the market leader in marketing and business transformation
Our ambition : become the market leader in marketing and business transformation Marketing Transformation Champion Consumer Engagement Digital Business Transformation 28
Slide 29: Shifting from a Holding to a Platform
SHIFTING FROM A “HOLDING” TO A “PLATFORM” Client centric Breaking down silos Data, Content and Technology at the core People first 29
Slide 30: Renewed Management Board
RENEWED MANAGEMENT BOARD JEAN-MICHEL ANNE-GABRIELLE STEVE ARTHUR ETIENNE HEILBRONNER KING SADOUN Executive Vice President, CFO Secretary General CEO Chairman & CEO PUBLICIS GROUPE PUBLICIS GROUPE PUBLICIS MEDIA PUBLICIS GROUPE 30
Slide 31: Implementation of New Management Structures
IMPLEMENTATION OF NEW MANAGEMENT STRUCTURES EXECUTIVE COMMITTEE JEAN-MICHEL ANNE-GABRIELLE STEVE ARTHUR ETIENNE HEILBRONNER KING SADOUN Executive Vice President, CFO Secretary General CEO Chairman & CEO PUBLICIS GROUPE PUBLICIS GROUPE PUBLICIS MEDIA PUBLICIS GROUPE ALAN CARLA NIGEL VÉRONIQUE WEXLER
Slide 32: Implementation of New Management Structures
IMPLEMENTATION OF NEW MANAGEMENT STRUCTURES MANAGEMENT COMMITTEE JEAN-MICHEL ANNE-GABRIELLE STEVE ARTHUR CARLA NIGEL VÉRONIQUE ETIENNE HEILBRONNER KING SADOUN SERRANO VAZ WEILL Executive Vice President, CFO Secretary General CEO Chairman & CEO Chief Strategy Officer DBT Lead CEO EMEA & APAC General
Slide 33: First Results: Publicis Groupe's Attractiveness
FIRST RESULTS: PUBLICIS GROUPE’S ATTRACTIVENESS 33
Slide 34: New Talents Joining the Group
NEW TALENTS JOINING THE GROUP ANNETTE KING NICK LAW VÉRONIQUE WEILL EMMANUEL ANDRÉ AGATHE BOUSQUET 34
Slide 35: Positive Momentum with New New Clients
POSITIVE MOMENTUM WITH NEW NEW CLIENTS 35
Slide 36: Partnership with Carrefour
PARTNERSHIP WITH CARREFOUR Strategic partnership with Carrefour to accelerate its digital transformation Publicis Groupe is at the convergence of marketing transformation and digital business transformation 36
Slide 37: Conclusion
gt PUBLICIS GROUPE CONCLUSION
Slide 38: Publicis Groupe Investor Day, 20 March 2018
Li aj ‘BE INVESTOR DAY LONDON 2018 Publicis Groupe Investor Day | 20 MARCH 2018 38
Slide 39: Supplemental Information
Supplemental Information 39
Slide 40: Revenue & Organic Growth Calculation
SUPPLEMENTAL INFORMATION REVENUE & ORGANIC GROWTH CALCULATION (including impact of contracts in production and events treated on a gross basis) (3) (EUR million) Q1 Q2 Q3 Q4 2017 Currency impact 2016 revenue 2,291 2,462 2,315 2,665 9,733 9 months (EUR million) 2017 Q4 2017 Currency impact (2) 50 26
Slide 41: Revenue by Sector
SUPPLEMENTAL INFORMATION REVENUE BY SECTOR (1) 2017 2016 Retail Non Food Non Food consumer Retail 6% 6% consumer Other products products Other 6% 14% 15% 7% Leisure/Energy/ Luxury Leisure/Energy/ 7% Luxury 7% Automotive Automotive 13% 13% Food and beverage Food and 12% beverage 12% Financial 15% Fin
Slide 42: Q4 2017 Revenue by Geography - Alternative Breakdown
SUPPLEMENTAL INFORMATION Q4 2017 REVENUE BY GEOGRAPHY - (ALTERNATIVE BREAKDOWN) Reported Organic (EUR million) Q4 2017 Q4 2016 growth growth Europe (1) 733 745 -1.6% -2.0% North America 1,308 1,362 -4.0% +4.4% BRIC + MISSAT (2) 292 308 -5.2% +0.9% Rest of the world 250 250 +0.0% +5.4% Total 2,583 2,
Slide 43: 2017 Revenue by Geography - Alternative Breakdown
SUPPLEMENTAL INFORMATION 2017 REVENUE BY GEOGRAPHY - (ALTERNATIVE BREAKDOWN) Reported Organic (EUR million) 2017 2016 growth growth Europe (1) 2,678 2,692 -0.5% +0.9% North America 5,187 5,236 -0.9% +0.5% BRIC + MISSAT (2) 1,013 1,011 +0.2% +0.1% Rest of the world 812 794 +2.3% +2.9% Total 9,690 9,7
Slide 44: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT (EUR million) 2017 2016 Operating margin 1 505 1,516 Amortization of intangibles arising from acquisitions (73) (79) Impairment (115) (1,440) Non-current income and expense (1) 12 Operating income 1 316 9 Net financial income (expenses) (61) (74) Earn-out revaluation (6
Slide 45: Gross Debt as of December 31, 2017
SUPPLEMENTAL INFORMATION GROSS DEBT AS OF DECEMBER 31, 2017 Breakdown by MATURITY 2021 (EUR million) Total 2018 2019 2020 2021 Onwards Eurobond 2021 (1) (2) 703 703 Eurobond 2023 493 493 Eurobond 2024 (1) (2) 586 586 Medium term loan 909 149 306 454 - - Earn out / Buy out 286 155 54 49 18 10 Other d
Slide 46: Net Debt by Currency
SUPPLEMENTAL INFORMATION NET DEBT AS OF DECEMBER 31, 2017 Breakdown by CURRENCY (EUR million) Total EUR USD GBP Others Eurobond 2021 (1) (2) 703 703 Eurobond 2023 493 493 Eurobond 2024 (1) (2) 586 586 Medium term loan 909 446 463 Earn out / Buy out 286 16 147 43 80 Other debt (1) (3) 157 35 100 6 16
Slide 47: Net Debt by Rate
SUPPLEMENTAL INFORMATION NET DEBT AS OF DECEMBER 31, 2017 Breakdown by RATE Earn-out / Fixed Floating (EUR million) Total Buy-out rate rate Eurobond 2021 (1) (2) 703 703 Eurobond 2023 493 493 Eurobond 2024 (1) (2) 586 586 Medium term loan (3) 909 463 446 Other debt (1) 157 89 68 Total gross debt ex.
Slide 48: Definitions
DEFINITIONS EBITDA: operating margin before depreciation. Operating margin: Revenue after personnel costs, other operating expenses (excl. non-current income and expense) and depreciation (excl. amortization of intangibles arising on acquisitions). Operating margin rate: Operating margin as a percen
Slide 49: Contact
CONTACT Press Peggy Nahmany, Vice-President, Director of Communications Tel. +33 1 44 43 72 83 Email. peggy.nahmany@publicisgroupe.com Investor Relations Jean-Michel Bonamy, Vice-President Investor Relations & Strategic Financial Planning Tel. +33 1 44 43 77 88 Email. jean-michel.bonamy@publicisgrou