Asia-Pacific saw its net revenue decline by 7.4% on a reported basis and by 6.7% on an organic basis. China, the first country to be impacted by Covid-19, recorded organic growth of -8.1% in 2020. Growth improved sequentially in the fourth quarter to -4.2%, thanks in particular to slightly positive growth in the Media activity.
In Latin America, the activity was strongly impacted by the health situation in Brazil and Mexico, which resulted in organic growth of -13.9% in the region in 2020. In addition, the change in exchange rates had a strong negative impact in the region. As a result, the Groupe posted a drop in its net income of -29.4%.
Net revenue in the Middle East and Africa was down 14.6% as reported (-11.7% on an organic basis), mainly due to the health situation in certain countries such as Israel and South Africa. The region was also affected by the end of certain Publicis Sapient projects in the
United Arab Emirates.
EBITDA amounted to euro 2,158 million in 2020, compared to euro 2,245 million in 2019, a decrease of 3.9%. The impact of the cost reduction plan announced in April amounted to euro 467 million over the year, on a comparable cost basis and excluding Epsilon acquisition costs. The EBITDA margin rate was 22.2% of net revenue (22.9% in 2019).
Personnel expenses totaled euro 6,242 million at December 31, 2020, up 2.8% from euro 6,073 million in 2019. This increase includes the mechanical impact of the Epsilon consolidation, effective since July 2019, which continued to have an effect in the first half of 2020. It was partially offset by the effects of cost reduction measures taken by the Groupe. As a percentage of net revenue, personnel expenses represented 64.3% over the year, compared to 62.0% in 2019. Fixed personnel expenses amounted to euro 5,457 million, i.e. 56.2% of net revenue versus 54.6% in 2019. Despite the consolidation of Epsilon in the first half of the year, fixed personnel expenses increased by only euro 104 million over the year, thanks to measures taken by the Groupe such as a hiring freeze, a pause in internal promotions and a reduction in the working week. Moreover, the Groupe decided to limit the use of freelancers. As a result, the cost of freelancers decreased by euro 70 million in 2020, and represented euro 278 million. Restructuring costs amounted to euro 175 million for the year (euro 116 million in 2019), reflecting additional charges related to the cost reduction plan.
Other operating expenses (excluding depreciation and amortization) amounted to euro 2,388 million, compared with euro 2,683 million in 2019. This represents 24.6% of net revenue compared to 27.4% in 2019, suggesting that the cost reduction measures more than offset the negative impact of Epsilon cost structure on this ratio. The Groupe was able to make significant savings on other operating expenses in 2020, thanks to the actions taken as part of the cost reduction plan, and thanks to some expenses that drastically reduced during the lockdowns. This was notably the case with travel restrictions, which mechanically reduced the travel-, recruitment- and seminar-related expenses.
The depreciation and amortization expense for the period amounted to euro 600 million in 2020, up 2.4% in comparison with 2019. The increase is largely due to the consolidation of Epsilon.
The operating margin totaled euro 1,558 million at December 31, 2020, i.e. a 6.1% decrease compared to December 31, 2019. This represents a margin rate of 16.0%, down by 90 basis points from 16.9% in 2019. Excluding the Epsilon acquisition costs in 2019, the operating margin declined by 130 basis points. This was due to the decline in the Groupe’s organic growth, caused by the Covid-19 crisis, nevertheless partially offset by a 5.4% reduction in the cost base on a comparable basis and at constant exchange rates.
Operating margin rates by major geographic areas reflected the various challenges faced by the different regions in 2020, in the context of the global pandemic. Rates were 10.2% in Europe, 18.6% in North America, 18.2% in Asia-Pacific, 10.4% in Latin America and 5.8% in the Africa/Middle East region.
Depreciation and amortization of intangible assets arising on acquisitions totaled euro 339 million in the year, versus euro 204 million in 2019. This increase is due to the full-year impact on the amortization of Epsilon intangible assets and brands, as these assets began to be amortized from July 1, 2019. Impairment losses amounted to euro 241 million, of which euro 226 million related to the real estate consolidation plan “All in One”, which is leading to a reduction in the number of sites, while allowing better collaboration between the teams. In 2019, impairment loss amounted to euro 209 million (of which euro 127 million linked to the All in One plan). Other net non-current income is positive at euro 5 million at December 31, 2020, compared to an income of euro 21 million in 2019.
Operating income amounted to euro 983 million for the year, compared to euro 1,267 million in 2019.
Net financial income, made up of net borrowing costs and other financial income and expenses, amounted to euro 198 million in 2020, compared with an expense of euro 91 million last year. The net expense on net financial debt was 103 million euros in 2020, including euro 143 million in interest charges on net debt. In 2019, net financial debt generated a net charge of euro 25 million. Other financial income and expenses amounted to a charge of euro 95 million, including in particular euro 77 million in interest on lease obligations and euro 16 million in costs related to the early unwinding of cross-currency swaps. Other financial income and expenses represented an expense of euro 66 million at December 31, 2019, including euro 70 million in interest on lease liabilities.
The revaluation of earn-out payments amounted to an expense of euro 17 million, compared to a charge of euro 22 million in 2019.
The tax charge was euro 196 million at December 31, 2020, corresponding to an effective tax rate of 24.7% in 2020, compared to euro 305 million in 2019, corresponding to an effective tax rate of 25.0% in 2019.
The share of profit of associates was minus euro 1 million in 2020 compared with minus euro 5 million the previous year. Minority interests in Groupe results were an income of euro 5 million at December 31, 2020, compared to a loss of euro 3 million at December 31, 2019.
In total, Groupe net income was euro 576 million in 2020 compared to euro 841 million in 2019.
