PARIS, Feb 3 (Reuters) - Publicis, the world’s third-biggest advertising group, beat market expectations for organic growth in the last quarter of 2020 thanks to its data company Epsilon, which helped it produce modest growth in the United States.
In the face of growing domination by Facebook and Alphabet’s Google, the Paris-based group is striving to move from traditional print and TV ads to targeted digital campaigns steered by data.
The $4.4 billion buyout of Epsilon in 2019, which met with analysts’ scepticism over its capacity to quickly integrate the group, is key to developing data-driven offers to clients.
“The major surprise came from the United States,” Chief Executive Officer Arthur Sadoun said for the end of 2020, still marked by a severe fall in sales as the COVID-19 crisis hit ad spending worldwide.
Underlying sales in the United States, Publicis’ biggest market, were up by 0.5% last year, way above the average of 19 analyst estimates compiled by the company.
The performance helped beat expectations for Publicis’ quarterly underlying sales, which fell by 3.9% to about 2.6 billion euros ($3.13 billion). Analysts expected on average a drop of 6.7%.
The key metric benefited from the addition of new customers over the last 18 months such as Kraft-Heinz, TikTok and Reckitt Benckiser and L’Oréal in China, the company said.
Publicis, home to ad agencies such as Leo Burnett and Saatchi & Saatchi, posted an operating margin rate of 16%, thanks notably to a cost-reduction plan of 467 million euros over the year.
The company is offering to pay a dividend of 2 euros per share.
Still, the prolonged spread of the novel coronavirus in Europe and North America might continue to bite the economy and ad spending, Publicis noted.
Publicis declined to provide full-year targets. It expects underlying sales to decline again in the first three months of 2021, before returning to growth in the second quarter. ($1 = 0.8317 euros) (Reporting by Mathieu Rosemain; Editing by Cynthia Osterman)