Publicis staff to share ‘record-high’ bonus pool after strong 2022

Publicis Groupe is to pay “record-high” annual bonuses of close to €500 million ($549 million) to staff after ending 2022 strongly, with better than expected revenue, up 10%, and profit up 23%.

The French agency group made an operating profit of €1.8 billion ($2 billion) on net revenue of €12.6 billion ($13.8 billion), which pushed up its margin to 18% — among the highest in the global agency sector.

Publicis boosted its 2022 performance with a strong Q4, which was up 9.4%, including “outstanding” growth of 38% in the UK, where there was increased client demand for business transformation at consulting arm Publicis Sapient and the benefit of winning Lloyds Banking Group’s media account a year earlier.

Publicis had already upgraded its forecast twice during 2022 and annual organic revenue growth of 10.1% was more than double what it had predicted at the start of the year. Annual revenue growth was 13% above 2019 levels – pre pandemic.

In a further sign of confidence that wider economic issues such as inflation and the Ukraine war are having limited impact on client spend, Publicis expects growth of between 3% and 5% in 2023, including in Q1.

Arthur Sadoun, the chief executive, hailed 2022 as “another record year for the Groupe”.

He said: “For the second year in a row, we delivered double-digit organic growth and record-high financials, with Q4 well ahead of expectations.

“Thanks to our data and technology capabilities, which now represent a third of our revenue, we have been able to continue to capture the shift in our clients’ spend towards first party data management, commerce and business transformation.

“This can be seen in [data unit] Epsilon and Publicis Sapient’s annual numbers, with organic growth of 12% and 19% respectively.

“That dynamic has also boosted our creative and media business [up mid-single digit and double-digit respectively], and is reflected in all of our regions, with the US at 10% [revenue growth], APAC at 6.5% and Europe at 12.3% for the year.”

Sadoun cited several factors that drove revenue and margin, including winning “more than our share of new business opportunities”, more “shared services” to support its agencies, the use of “global delivery centres” in low-cost offshore locations and its internal collaboration platform Marcel.

He added that this “makes us confident for the year ahead, despite the continued macro-economic challenges”.

Publicis said the “bonus pool” for staff hit a “record-high”. It is understood to be close to €500m ($549 million), which would be up roughly a quarter on 2021, although staff numbers have also increased.

The exact details were undisclosed but it is thought that somewhere in the region of 35,000 employees who are entitled to variable remuneration are likely to share the bonus pot.

The company has already spent €50 million ($55 million) on giving about 45,000 staff who were not entitled to variable remuneration a one-off exceptional bonus, worth one week’s salary, with payments made early, in November, before the financial year-end, to help with the rising cost of living.

Publicis’ headcount rose from about 87,000 at the end of 2021 to 96,000 at the end of 2022.

The company, which Sadoun has led since 2017, is the first of the big agency groups to report annual results.

Ian Whittaker, founder and managing director of Liberty Sky Advisors, said: “Publicis again comfortably beat its revenue guidance, with FY organic growth at 10.1% against company guidance of 8.5%, a guidance that had already been twice upgraded already in 2022.

“Together with the very solid results of Next 15, what these numbers also suggest is that revenue growth momentum at the agencies remains solid and there are no signs yet that wider macro-economic concerns are impacting their performance.

“In fact, with Publicis reporting Q4 growth of 9.4%, including over 13% growth in Europe, one can be forgiven for asking 'what downturn?'. What will also reassure the markets is the very solid guidance of 3-5% organic revenue growth for 2023, especially given the tough comparables.”

Shares in Publicis Groupe rose 5% in early trading on the strength of the results and the outlook.