Publicis shares drop 12%
But Publicis wasn’t the only holding to see its stocks slump
Drugi jezik na kojem je dostupan ovaj članak: Bosnian
Publicis Groupe has seen a significant drop in share value after the company warned of a worse-than-expected slump for its traditional advertising business, which is an issue also affecting the stock prices of rivals such as WPP, Interpublic and Omnicom.
Shares of Publicis fell 12% from €55 to €48.50 as Global CEO Arthur Sadoun admitted quarterly growth had slowed from 2.2% in the third quarter to 0.5% in the final quarter of 2018.
WPP’s share price fell 6%. The stock prices of Interpublic and Omnicom both dropped by about 5%.
Publicis presented its fourth quarter results Thursday, and Sadoun said Publicis had been “on track” during the fourth quarter until some large FMCG clients reduced spend by about €150m less than the company had budgeted, Campaign writes.
“The impact of attrition on traditional advertising has been stronger than expected,” he said, explaining “a handful of US clients” were largely to blame.
Sadoun has also warned that they expect bumpy start to the 2019 as the same trend will continue in first quarter of this year, which is no surprise as FMCG represents a quarter of the group’s revenue and traditional advertising represents about 35% of the business, according to Sadoun.
Sadoun pointed to growth from financial services clients. While they have been cutting traditional agency services at the same rate as FMCGs, they have increased their overall spend by buying other digital transformation services from Publicis, he said.
But he warned: “Client attrition obliges us to be more drastic with our cost base.”
Paul Richards, head of research at Dowgate Capital Stockbrokers in London, said: “For Publicis shares to be down 12%, the market is not concerned about one particular area [of the business] but the traditional agency model in general. With WPP, IPG and Omnicom down, investors are doing a ‘read-across’. It shows that it’s not just an issue for Publicis, but for all the traditional agency groups. The world is changing and the big global companies are struggling to adapt.”