Europe and the West is expecting growth of 1.5%, down on the 2014 to 2018 period when growth was between 3% and 5%. Economic growth was slower in 2019 than in other years, although the resilience of consumption helped avoid recession. Growth is expected to be +4.8% in France, +3.2% in the United Kingdom and +0.1% in Spain, with declines of -0.7% in Germany and -0.1% in Italy. The Asia-Pacific zone is forecast to grow +3.9%, with in particular, +5.0% growth in China. Latin America is set to post growth of +3.3%, with Brazil seen up +2.8% and Mexico up +11.7%. In December 2019, Zenith estimated that media advertising investment would grow by 4.3% in 2020, with significant positive impacts from the Summer Olympics, Euro UEFA 2020 and the US presidential elections. However, the covid-19 epidemic, which began in Wuhan (China) in December 2019 before spreading worldwide during the first quarter of 2020, could have a significant effect on growth forecasts for both advertising and media investments and the broader economy. A number of global events have already been postponed, including two of the three mentioned above. This means that the Zenith forecasts will inevitably require updating. The digital revolution has substantially changed relationships with the media and consumers, but also brings numerous growth opportunities to Publicis Groupe and its clients. This is the context in which Publicis Groupe is accelerating its transformation and intends to be the vital partner clients need to transform their marketing and operations.
In this difficult context, the Group has taken the necessary steps to boost organic growth, whilst maintaining a robust operating margin and its capacity to generate cash flow. In 2019, a four-stage plan to restore organic growth was introduced to accompany the reorganization announced in December 2015, which was designed to bring about a more efficient cost structure. As such, the Group acquired and consolidated Epsilon, overhauled the management and repositioned the operations of Publicis Sapient to focus on business transformation, through the expertise of business lines, and finalized its country model to facilitate cross-fertilization across its various areas of expertise. At the same time, the Group is continuing to promote a new generation of leaders to strategic positions.
The net revenue of Publicis Groupe, including Epsilon from July 1, 2019, was euro 9,800 million in 2019, compared with euro 8,969 million in 2018, a 9.3% increase. Growth at constant exchange rates was +5.9%. Organic growth was -2.3% in 2019. Excluding transaction costs related to Epsilon, the operating margin was euro 1,699 million, an increase of 11.6%, or a rate of 17.3%, up 30 basis points compared with 2018.
In 2019, the Group’s net income stood at euro 841 million compared with euro 919 million in 2018. Headline net income (as defined in note 9 of the annual consolidated financial statements) stood at euro 1,188 million compared with euro 1,082 million in 2018. Diluted headline net income per share stood at euro 5.02, up 8.9% on 2018 (8.2% at constant exchange rate and excluding BEAT tax). The balance sheet at December 31, 2019 showed net financial debt of euro 2,713 million compared with a net cash position of euro 288 million at December 31, 2018.
Average net financial debt stood at euro 2,375 million in 2019; it amounted to euro 1,323 million in 2018. The dividend was initially set at 2.30 euro and planned to be submitted to the General Shareholders’ Meeting on May 27, 2020, with a payment date on July 9, 2020.
That announcement had been made when the Groupe published its 2019 full year results on February 6, 2020, before the global spread of the COVID-19 pandemic and before the consequences it has today on the economy. On April 10, 2020, the Supervisory Board endorsed the decision of the Directoire to ask shareholders for solidarity with the Company, by cutting the proposed dividend by 50% from 2.30 euro to 1.15 euro, to be paid exceptionally on September 28, and encouraging shareholders to reinvest the dividend in the Company by choosing the option of payment in shares. The dividend will be submitted to shareholders’ vote at the next AGM on May 27, 2020.
