Publicis Groupe Sa · EURONEXT:PUB
Publicis Groupe Sa — H1 2015 Earnings Presentation
47 slides from Publicis Groupe Sa's earnings presentation, Jul 23, 2015
Slide 1: H1 Results
PUBLICIS GROUPE July 23, 2015
Slide 2: Disclaimer
DISCLAIMER This presentation contains forward-looking statements. The use of the words "aim(s)," "expect(s)," "feel(s)," "will," "may," "believe(s)," "anticipate(s)" and similar expressions in this presentation are intended to identify those statements as forward looking. Forward-looking statements
Slide 3: Highlights
HIGHLIGHTS • Revenue and operating margin up more than 30% (1) • Headline EPS up 28.2% (1) • Significant positive impact of currencies • Organic growth in line with our expectations • Headwinds in H1 2015: 2014 issues • Digital over 50% of revenue • Sapient integration according to plan • Significan
Slide 4: H1 2015 Key Figures
H1 2015 KEY FIGURES (EUR million) H1 2015 % change Revenue 4,542 +35.3% Operating margin 589 +35.4% As a % of revenue 13.0% - Group Net Income 363 +39.6% Headline EPS, diluted (1) 1.68 +28.2% Free Cash Flow (2) 458 +55.8% (1) After elimination of impairment charge, amortization on intangibles arisin
Slide 5: H1 Revenue
H1 REVENUE (EUR million) Q1 Q2 H1 2015 REVENUE 2,103 2,439 4,542 2014 REVENUE 1,597 1,761 3,358 Reported growth +31.7% +38.5% +35.3% Growth excluding forex +16.1% +20.5% +18.4% Organic growth +0.9% +1.4% +1.2% 5
Slide 6: Revenue by Geography – Q2 2015
REVENUE BY GEOGRAPHY – Q2 2015 Organic Reported (EUR million) Q2 2015 Q2 2014 growth growth Europe 681 552 +2.3% +23.4% North America 1,323 842 +1.5% +57.1% Asia Pacific 265 207 +3.3% +28.0% Latin America 2013101 103 -5.3% -1.9% Middle East Africa 69 57 -2.4% +21.1% Total 2,439 1,761 +1.4% +38.5% 6
Slide 7: Revenue by Geography – H1 2015
REVENUE BY GEOGRAPHY – H1 2015 Organic Reported (EUR million) H1 2015 H1 2014 growth growth Europe 1,269 1,046 +1.8% +21.3% North America 2,475 1,637 +1.2% +51.2% Asia Pacific 486 384 +3.1% +26.6% Latin America 2013191 195 -5.3% -2.1% Middle East Africa 121 96 +0.4% +26.0% Total 4,542 3,358 +1.2% +3
Slide 8: Growth by Country
GROWTH BY COUNTRY H1 2015 organic growth Germany, India, Poland, Singapore, Philippines, Korea, > 5% Argentina, Taiwan, South Africa, Saudi Arabia, Venezuela USA, France, China, Australia, UAE, Spain, From 0 to 5% The Netherlands, Thailand 2013 < 0% UK, Brazil, Canada, Italy, Russia, Mexico, Israel,
Slide 9: Digital
DIGITAL Organic H1 2015 H1 2014 Growth EUR million 2,314 1,365 +5.0% (1) % of Group revenue 50.9% 40.6% (1) 51.6% of Q2 2015 revenue 9
Slide 10: H1 2015 Results
H1 2015 RESULTS
Slide 11: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT (EUR million) H1 2015 H1 2014 % change Revenue 4,542 3,358 +35.3% EBITDA (1) 675 493 +36.9% Operating margin 589 435 +35.4% as % of revenue 13.0% 13.0% - Amortization of intangibles arising from acquisitions (43) (24) Impairment loss 0 (24) Non-current income and expens
Slide 12: Significant Impact of Currencies in H1 2015
SIGNIFICANT IMPACT OF CURRENCIES IN H1 2015 • North America = 54% of revenue MEA Asia Pacific Latin America 3% 11% (EUR million) H1 4% 2014 Revenue 3,358 North America Europe 28% 54% Currency impact 478 2014 Revenue at 2015 exchange rates 3,836 2013 2015 Revenue before impact of acquisitions 3,881 R
Slide 13: Operating Margin
OPERATING MARGIN (EUR million) H1 2015 H1 2014 Revenue 4,542 3,358 Personnel costs (2,944) (2,199) Other operating expenses (923) (666) Depreciation 2013 (86) (58) 589 435 Operating margin 13.0% 13.0% 13
Slide 14: Change in Operating Margin as a % of Revenue
CHANGE IN OPERATING MARGIN AS A % OF REVENUE 13.2% +20bp 13.0% +20bp -40bp 13.0% H1 2014 H1 2014 Other H1 2015 at H1 2015 operating FX rates, expenses Impact Personnel after acquisitions of FX and costs acquisitions 14
Slide 15: Net Financial Expenses
NET FINANCIAL EXPENSES (EUR million) H1 2015 H1 2014 Var. ’15 / ’14 Eurobond 2015 (1) (2) +1 ORANE 2022 (1) (1) - Other financial expense, net of interest income 3 - +3 Interest on discounted earn-out debt and finance leases (10) (9) -1 Interest on net financial debt, excluding Sapient (9) (12) +3 S
Slide 16: Income Taxes
INCOME TAXES H1 2015 H1 2014 EUR million 159 113 % effective tax rate 30.5% 28.4% 16
Slide 17: Headline Earnings per Share, Diluted
HEADLINE EARNINGS PER SHARE, DILUTED (1) €1.68 +28.2% €1.42 -7.7% €1.31 2013 H1 2013 H1 2014 H1 2015 (1) After elimination of impairment losses, amortization of intangibles arising from acquisitions, main capital gains and losses on disposal of assets, revaluation of earn-out payments 17
Slide 18: Balance Sheet
BALANCE SHEET (EUR million) June 30, 2015 June 30, 2014 Dec. 31, 2014 Goodwill and intangibles 11,559 7,228 7,961 Other fixed assets 917 647 783 Current and deferred tax (399) (121) (200) Working capital (2,477) (2,034) (2,847) TOTAL 9,600 5,720 5,697 Group equity 6,021 5,181 6,086 Minority interest
Slide 19: Net Cash / (Debt)
NET CASH / (DEBT) (in EUR million) Average Net Cash / (Debt) Net Cash / (Debt), as of June 30 128 20 Cash Cash (555) (637) (1,881) (2,906) H1 2013 H1 2014 H1 2015 19
Slide 20: Free Cash Flow
FREE CASH FLOW (EUR million) H1 2015 H1 2014 EBITDA (1) 675 493 Interest paid (18) (16) Tax paid (136) (165) Other items 20 19 Cash flows from operations before change in WCR 541 331 Investments (2) (Capex), net of disposals (83) (37) Free Cash Flow before change in WCR 458 294 (1) EBITDA: operating
Slide 21: Use of Cash
USE OF CASH (EUR million) H1 2015 H1 2014 Free Cash Flow before change in WCR 458 294 Change in WCR (814) (779) Acquisitions (net of disposals) (3,002) (61) Earn-out (90) (42) Buy-out (21) (4) Dividends paid (7) (8) Share buy-back (477) - Sales of treasury shares due to exercise of stock options 12
Slide 22: Financial Ratios
FINANCIAL RATIOS Past 12 months Past 12 months Internal ending ending objectives June 30, 2015 June 30, 2014 Average Net Debt / EBITDA (1) 1.22 0.12 < 1.50 Net Debt / Shareholders’ Equity 0.48 Cash positive < 0.50 Interest Cover (2) 2013 29 48 >7 (1) EBITDA: operating margin before depreciation (2)
Slide 23: ORANE Redemption
ORANE REDEMPTION • As announced, Publicis Groupe completed the early redemption of the 2022 ORANE on July 15, 2015 12.7 million shares existing shares delivered to the ORANE holders Cash payment of €11 million for current coupon prorata temporis Simplification of Publicis Groupe’s balance sheet
Slide 24: Liquidity as of June 30, 2015
LIQUIDITY AS OF JUNE 30, 2015 AVAILABLE (EUR million) TOTAL DRAWN AVAILABLE AS OF JUNE 30, 2014 Committed Facilities 364-day revolving credit facilities 205 205 - 205 5-year revolving credit facility (1) 517 200 317 505 5-year syndicated facility (Club Deal) (2) 1,200 - 1,200 1,200 Total Committed F
Slide 25: Reinforcing Liquidity
REINFORCING LIQUIDITY • Publicis Groupe signed a new 5-year revolving credit facility in the amount of €2 billion on July 22, 2015 • The new credit facility will replace the existing €1.2 billion revolving credit facility maturing July 2016 The syndication was oversubscribed and includes 19 intern
Slide 26: Update
UPDATE
Slide 27: Publicis Groupe, the Only Player Positioned to Best Serve Its Clients
PUBLICIS GROUPE, THE ONLY PLAYER POSITIONED TO BEST SERVE ITS CLIENTS • In their quest for transformation • Across the whole marketing & communication value chain From Consulting to Commerce through technology, branding, communication 27
Slide 28: Sapient Integration: First 90 Day Plan Completed
SAPIENT INTEGRATION: FIRST “90 DAY PLAN” COMPLETED • Combine and connect capabilities to form innovative solutions Leading to a unique proposal covering the full range of marketing and communication capabilities • Leverage India-based assets and combined scale More than 9,000 developers with sea
Slide 29: Breakdown of H1 Revenue by Sector: 2015 vs. 2010
BREAKDOWN OF H1 REVENUE BY SECTOR: 2015 vs. 2010 (1) Digital vs. Analog 2010 2015 2010 2015 2010 2015 2010 2015 2010 2015 2010 2015 2010 2015 21 35 36 32 47 51 59 61 59 58 66 70 83 76 79 65 64 68 53 49 41 39 41 42 34 30 17 24 FMCG TMT Automotive Retail Healthcare Financial Leisure Energy Luxury (1)
Slide 30: Conclusion
CONCLUSION
Slide 31: 2015 Media Advertising Growth Forecast Update
2015 MEDIA ADVERTISING GROWTH FORECAST UPDATE (1) +4.9% in December 2014 +4.4% in March 2015 +4.7% +4.2% in June 2015 (2) +3.7% +3.6% 2012 2012 2013 2013 2014 2014 2015 (1) Source: ZenithOptimedia (2) Agencies’ market expected to grow by c.2.5% in 2015 31
Slide 32: In a Nutshell
IN A NUTSHELL… Solid H1 2015 numbers Free cash flow up 56% (1) Successful re-positioning of Publicis Groupe • Sapient integration : 1st “90 day plan” completed • Data management • Technology • Transformation Next steps in Sapient integration • Next “90 day plan”: Publicis.Sapient go-to-marke
Slide 33: Strong Financial Performance Expected in 2015
STRONG FINANCIAL PERFORMANCE EXPECTED IN 2015 Q4 2014 2015 Double digit increase in FY2015 • Revenue • Operating margin • Headline EPS Confirmed acceleration Free cash flow (1) above €1 billion in H2 organic growth vs. H1 (1) Free cash flow before change in WCR 33
Slide 34: Q&A
Q&A
Slide 35: Appendices
APPENDICES
Slide 36: H1 Revenue in USD Million
H1 REVENUE IN USD MILLION Revenue 4,600 5,064 +10.1% H1 2014 H1 2015 36
Slide 37: H1 2015: Revenue by Activity
H1 2015 : REVENUE BY ACTIVITY Analog & Digital Media = 22% 11% Media SAMS 15% in 2014 13% 15% in 2014 51% 41% in 2014 Digital 25% 29% in 2014 Advertising 37
Slide 38: H1 2015: Revenue by Sector
H1 2015: REVENUE BY SECTOR (1) H1 2015 H1 2014 Retail Retail Other Non Food consumer products Other Non Food consumer products 6 5 16 Leisure/Energy/Luxury 5 4 18 Leisure/Energy/Luxury 6 7 Financial Financial 11 Food and beverage 12 14 15 Food and beverage 13 13 14 Automotive Automotive 14 13 14 TMT
Slide 39: Revenue & Organic Growth Calculation
REVENUE & ORGANIC GROWTH CALCULATION (EUR million) H1 Q2 Q1 2014 Revenue 3,358 1,761 1,597 Currency impact 478 263 215 Currency impact (EUR million) 2014 Revenue at 2015 exchange rate (a) 3,836 2,024 1,812 (EUR million) H1 Q2 Q1 2015 Revenue before impact of acquisitions (1) (b) 3,881 2,052 1,829 GB
Slide 40: H1 2015 Organic Growth by Region and Activity
H1 2015 ORGANIC GROWTH BY REGION AND ACTIVITY Middle North Asia Latin Europe East / Total America Pacific America Africa Digital +10.1% +1.6% +20.5% +10.5% +6.5% +5.0% Analog -2.4% +0.7% -2.4% -8.3% -1.1% -1.5% Total +1.8% 2013 +1.2% +3.1% -5.3% +0.4% +1.2% 40
Slide 41: Q2 2015 Revenue by Geography (Alternative Breakdown)
Q2 2015 REVENUE BY GEOGRAPHY (ALTERNATIVE BREAKDOWN) Reported Organic (EUR million) Q2 2015 Q2 2014 growth growth Europe (1) 663 531 +24.9% +2.3% North America 1,323 842 +57.1% +1.5% BRIC + MISSAT (2) 261 222 +17.6% +0.8% Rest of the world 2013192 166 +15.7% -0.5% Total 2,439 1,761 +38.5% +1.4% (1)
Slide 42: H1 2015 Revenue by Geography (Alternative Breakdown)
H1 2015 REVENUE BY GEOGRAPHY (ALTERNATIVE BREAKDOWN) Reported Organic (EUR million) H1 2015 H1 2014 growth growth Europe (1) 1,238 1,005 +23.2% +2.0% North America 2,475 1,637 +51.2% +1.2% BRIC + MISSAT (2) 476 412 +15.5% -0.8% Rest of the world 2013353 304 +16.1% +1.5% Total 4,542 3,358 +35.3% +1.2
Slide 43: H1 2015 Organic Growth by Region and Activity (Alternative)
H1 2015 ORGANIC GROWTH BY REGION AND ACTIVITY (ALTERNATIVE BREAKDOWN) North BRIC + Rest of Europe (1) Total America Missat (2) the World Digital +10.0% +1.6% +20.4% +12.8% +5.0% Analog -2.1% +0.7% -5.5% -2.1% -1.5% Total 2013 +2.0% +1.2% -0.8% +1.5% +1.2% (1) Europe excluding Russia and Turkey (2) B
Slide 44: Gross Debt, as of June 30, 2015
GROSS DEBT, AS OF JUNE 30, 2015 • Breakdown by MATURITY July 2015 - July 2016 – July 2017 – July 2018 – July 2019 (EUR million) Total June 2016 June 2017 June 2018 June 2019 onwards Eurobond 2021 (1) 776 - - - - 776 Eurobond 2024 (1) 650 - - - - 650 Oranes 11 11 - - - - Medium term loan 1,430 - - 47
Slide 45: Net Debt as of June 30, 2015 by Currency
NET DEBT AS OF JUNE 30, 2015 • Breakdown by CURRENCY (EUR million) Total EURO USD GBP Others Eurobond 2021 (1) (2) 776 - 776 - - Eurobond 2024 (1) (2) 650 - 650 - - Oranes 11 11 - - - Medium term loan 1,430 446 984 - - Earn out / Buy out 423 74 185 42 122 Other (1) 706 457 97 6 146 Cash & marketable
Slide 46: Net Debt as of June 30, 2015 by Rate
NET DEBT AS OF JUNE 30, 2015 • Breakdown by RATE Earn-out / Fixed Floating (EUR million) Total Buy-out rate rate Eurobond 2021 (1) (2) 776 - 776 - Eurobond 2024 (1) (3) 650 - 650 - Oranes 11 - 11 - Medium term loan 1,430 - - 1,430 Other debt (1) 706 - 111 595 Total gross debt excluding earn out/buy
Slide 47: ZenithOptimedia's Advertising Forecast
ZENITHOPTIMEDIA’S ADVERTISING FORECAST 2015 major media advertising forecast (1) at current prices US +3.7% Japan +2.5% Western Europe +3.1% Including: United Kingdom +6.7% Germany +2.2% France -0.4% Italy +1.6% Spain +6.7% Central & Eastern Europe -4.3% China +9.3% Brazil +3.5% WORLDWIDE (Media) +4