The United Kingdom suffered the largest drop in activity in 2020, at -11.1%. The initial denial by politicians resulted in a delay in lockdown, which was therefore less effective from a health point of view and was costly in economic terms. In addition, it seems that the uncertainty related to the tense negotiations with the European Union on the terms of Brexit have had an adverse economic impact. As everywhere else, the Central Bank has implemented a very expansionary monetary policy, based on the monetization of public debt: the UK Government now has an account opened with the Central Bank, which allows it direct access to financing.
The Japanese economy saw a limited decline in activity of 5.3%. The rigor and effectiveness of the health measures taken made it possible to better control the epidemic in the first half of the year and limit its economic impact. Moreover, its strong dependence on China and the Asian region in general was an asset in offsetting the shock of the spring shutdown.
Only China saw an increase in its GDP in 2020: +2%. It appears that the system in place made it possible to implement particularly strict but effective health measures, since at the end of the year the epidemic seemed to have been totally eradicated. Furthermore, in the second half of the year, the Chinese economy benefited from demand from developed countries, which had to shut down their production facilities for longer. The Chinese trade surplus thus reached a record in 2020 and helped to mitigate the impact of the health crisis, which was mainly visible in the first quarter.
The oil price has kept pace with changes in the economic outlook. Its decline was amplified in the first quarter by the disagreement between Saudi Arabia and Russia on limiting their production. The rebound from mid-March then allowed the oil price to exceed the threshold of USD 50 at the end of the year, but it remained down year-on-year.
In this context, advertising expenditure growth forecasts were updated several times during 2020 in order to take account of the evolving health crisis. In the second quarter, Zenith estimated that advertising spending in 2020 would be down by 9.1%, roughly in line with the trend observed during the previous crisis of 2009. The latest forecasts from Zenith, released in December 2020, showed an expected decrease of 7.5% for the year, better than initially anticipated. Zenith believes that the shock of traditional advertising spending was partially offset by the growth of digital, itself driven by the strong development of e-commerce. In 2020, the share of digital advertising was estimated at 52%, a significant increase compared to 48% in 2019. For the first time, digital spending exceeded all spending on other channels.
This sudden change marks an acceleration of the trends that the digital revolution has generated, both in terms of the relationship between brands and the media and their consumers. In this context, the transformation that the Groupe initiated several years ago has proven to be a real asset.
In 2020, Publicis was able to quickly implement the necessary measures to ensure the safety of its employees and be a strategic partner for its clients in order to reduce the impact of the crisis. Firstly, by preserving the strength of its employees, by emphasizing their safety and psychological well-being, by reinventing the ways of working together, and by accelerating its Diversity, Equality and Inclusion agenda. Secondly, by contributing to the success of its clients in a world dominated by platforms, by providing them with real identities, disruptive creation, smart media and direct channels to their consumers, in order to ensure their growth and that of the Groupe. And thirdly, by continuing to improve its efficiency, taking advantage of its unique structure to maintain the best financial ratios.
In 2020, the Groupe’s net revenue was euro 9,712 million, compared to euro 9,800 million in 2019, down 0.9% as reported and 6.3% on an organic basis.
The operating margin stood at euro 1,558 million, down by 6.1%, resulting in an operating margin rate of 16.0%, down 90 basis points compared to 2019. Excluding transaction costs related to Epsilon in 2019, the margin fell by 8.3%.
In 2020, the Groupe’s net income stood at euro 576 million compared with euro 841 million in 2019.
Headline net income (as defined in Note 10 of the consolidated financial statements) stood at euro 1,034 million compared with euro 1,188 million in 2019. Diluted headline net income per share amounted to euro 4.27, down 14.9% compared to 2019.
The balance sheet at December 31, 2020 showed net financial debt of euro 833 million compared with debt of euro 2,713 million at December 31, 2019. Average net financial debt stood at euro 3,286 million in 2020; it amounted to euro 2,375 million in 2019.
The dividend that will be proposed to the General Shareholders’ Meeting of May 26, 2021 is euro 2.00 per share. As a percentage of diluted headline earnings per share, it represents a payout ratio of 46.8%, above the level observed before the pandemic. Subject to the approval of the General Shareholders’ Meeting, payment of the dividend in cash or in shares, at the holder’s choice, will be made on July 6, 2021.
