Publicis Groupe has reported a significant annual loss due to troubles with Razorfish and the loss of major US accounts during mediapalooza.
The world's third-largest advertising and media group posted a net loss of €527 million despite increasing annual revenues by 1.4% to €9.7 billion.
The loss is due to an impairment charge of €1.44 billion, most of which was attributed to its digital business Publicis.Sapient.
In announcing the results on an analyst briefing, outgoing Publicis Groupe CEO Maurice Lévy cited “difficulties” at Razorfish, including an over-reliance on “one-off projects and management changes”, including three CEOs in three years, British trade title Campaign reports.
It was these “serious issues” with Razorfish that led to its merger with SapientNitro in 2016.
Publicis Groupe said Razorfish posted “negative growth in double digits” and had failed to pick up enough new work to account for projects that had just completed.
“After this impairment, the balance sheet now shows very solid indicators with a debt/equity ratio of 0.21 and liquidity of close to five billion euro, considerably enhancing our agility,” Lévy said in a statement.
In spite of the one-off writedown, Publicis Groupe's consolidated operating margin is a healthy €1.5 billion, 15.6% of revenue.
Most of Publicis Groupe's organic growth can be attributed to digital work, which grew 3.2% globally and 9.5% in Asia-Pacific.
Major clients Publicis picked up include Asda in the UK, Wal-Mart in the USA, account wins including Merck, KFC and, more recently, HSBC, but also the return of Special K.
In Australia, business wins include Aldi, Fiat Chrysler, Ladbrokes, 21st Century Fox, Mastercard and Sunsuper.
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