Publicis Group Sa S/Adr

Good morning. This is the conference operator. Welcome and thank you for joining the Publicis Group first half 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and 1 at any time. Should anyone need assistance during the conference call, they may single an operator by pressing star and 0 on their telephone. At this time, I would like to turn the conference over to Mr. Arthur Sadun, Chairman and CEO. Please go ahead, sir.

Merci Judith. Bonjour and welcome to Publicis Group first half 2024 result call. I am Arthur Sadoun and I'm here in Paris with our CFO Laurie Snould. Jean-Michel Bonamy is also here and will be available to take all of your questions offline after this session. I will begin by sharing RH1 results. Loris will then provide more details on our numbers. And I will conclude with our outlook for the rest of the year. As usual, we will take all of your questions together after the presentation. But before we start, please take the time to read the disclaimer which is an important legal matter. Ok, let's get into the presentation. There are three highlights to take away from our H1 performance. First, we continued to win market share, outperforming our peers by close to 400 basis points on average in Q2 as we did in Q1. Second, once again, we achieved the best financial KPIs of our industry. Last but not least, we are upgrading our full-year organic growth guidance despite continued microeconomic pressures. Now, let's get into the details. We had a very strong first half of the year with plus 5.4% net revenue organic growth. As some are measuring their growth on revenue, we thought it would be useful to give you an indication of what it looks like for us. So, this means like-for-like revenue growth is plus 7.4% in H1. Still, we believe that the right reference for the industry and ourselves remains net revenue organic growth. At plus 5.6% organic growth, Q2 came ahead of expectation, on top of a tough comparable of 7.1% last year and accelerating versus a strong Q1. In a global context that is still challenging, our unique revenue mix continues to show its strengths. The combination of Epsilon and Media, representing circa 50% of our revenue, remains strongly accretive to our performance with double-digit organic growth in Q2. Epsilon delivered plus 6.1% organic growth, driven by continued high demand for identity-based media solutions in a soon-to-be cookie-less world. Media was up double digit again, due to no contract wins and gains with existing clients. As in Q1, Publicis Sapiens experienced a slight decline in the context of client cautiousness toward capped spend as reflected in the result of all IT consulting firms. Meanwhile, Creative was once again resilient with low single-digit growth driven by solid momentum in production and new business win, including scoping expansions. We performed well in all of our regions, thanks to the strength of our offer. The US, our largest geography, continued to post strong organic growth this quarter at plus 5.3% on top of plus 5% last year. Europe delivered a solid plus 4.2% organic growth, building on double-digit organic growth in 2022 and in 2023. This includes the UK, our second largest market, which recorded double-digit growth across its media and creative businesses this quarter, while Publicis Sapiens faced a tough comparable of plus 32% last year. Asia-Pac recorded plus 7.7% organic growth, with a very strong China at plus 10.5% on top of 7% growth in Q2 last year thanks to continued new business wins. In H1, we continue to achieve the best financial KPI of our industry thanks to our platform organization. Our operating margin reached 17.3%. We maintain this record level in line with our 2023 number while investing materially in our talent and spending circa 45 million in H1 on our AI strategy presented at the beginning of the year. Headline EPS was €3.38 up 5.3% versus H1 2023. When it comes to free cash flow, we delivered €744 million in H1 above 2023 record level. Over the last six months, we doubled down on Bolton acquisition, investing 230 million euros, more than what we spent in the whole 2023. This allowed us to reinforce our existing offer and geographical footprint. We acquired Spinnaker SCA to support Publicis Sapiens AI capabilities in supply chain consulting. Acre Asia to reinforce our influence offer in the region, and Downtown Paris to strengthen our production backbone for our luxury clients. Looking at the rest of the year, our current pipeline for M&A is strong, with a number of advanced negotiations. This means we will accelerate our investment in H2 and deliver on our objective of the 700 to 800 million euros worth of acquisition for 2024 in line with our capital allocation plan for the year. Finally, our average net debt was 375 million euros in H1. Before handing over to Loris, let me say a word about our creative success this quarter. Not only were we awarded a large number of Grands Prix during this year's Cannes Lions Festival, but Publicis Conseil, the founding agency of our group, created by Marcel Bluestain Blanchet, was named Agency of the Year. agency that started as a small creative workshop in Montmartre almost 100 years ago, recognized as the best in the world, was an incredibly proud moment for Maurice and myself, who both ran this agency in the past. This is a great recognition of the work done by Agathe Bousquet and Marco Vantorelli, and of course all of their team. What makes this award even more special is that the work rewarded was for some of our biggest and often historical clients like Renault, Orange, AXA or BNP Paribas. Here is just one example from Renault, our partner for 60 years, which won two Grands Prix.

Today, as soon as we leave the center of the cities, public transport is 5% of the travel.