Publicis Groupe on Thursday said it plans to divest Publicis Health Solutions, after reporting weaker-than-expected revenues for the first nine months of the year.
Revenues for the French holding company’s latest quarter came in at $2.5 billion, with organic growth of 1.3% in the quarter. Excluding PHS, organic growth was at 2.2% in the third quarter. Analysts had expected a rise of 1.4%, according to The Wall Street Journal.
Across the first nine months of the year, revenues were $7.5 billion, up just 0.2% on an organic basis after what Arthur Sadoun called a “a bump in the road” in the second quarter.
Sadoun, chairman and chief executive, had put this down to PHS (specifically the US part), for which the group has started the divestment process following a strategic review. PHS services contract sales organizations (CSOs).
Sadoun hailed the network’s return to growth, noting “strong momentum in new business” at Publicis, which included the network’s recent win of GlaxoSmithKline’s $1.7 billion global media business, following a competitive review.
He singled out the GSK win as “both emblematic and a concrete example of our attractiveness at a global level.”
Sadoun continued: “We won the four separate pitches, thanks to our unique approach to data and our new platform model with Marcel at the core. We came with an original and innovative solution offering the best return on investment without hampering our own conditions.”
New business wins in the quarter also included Cathay Pacific (global creative and media), Western Union global creative, Nestlé’s media in south-east Asia, and Mondelez International’s media in several markets (excluding the UK).
Europe was among the best-performing regions in the third quarter, with organic growth of 4.4%, behind Latin America at 4.8%. North America, meanwhile, declined 0.6% organically; however, when the impact of the health division was taken out, it grew 1%.
He added that the third quarter was “again productive when it comes to the acceleration of our transformation. So far, we are ahead on every strategic and operational KPI of the Sprint to the Future plan presented in March. We have also launched a review of our asset portfolio, which will optimize the allocation of our resources and help us scale our strategic game changers.”
This article has been corrected to clarify that the divestment process only includes PHS and not a review of the Publicis Health portfolio.