Companies in the news ... and how they were assessed
Publicis/wpp: old economy blues
Shares in the advertising conglomerate Publicis suffered “their biggest one-day drop since 1992” last week, said Reuters, wiping almost s2bn off the French company’s stock market value, as analysts predicted that the group would struggle to hit its targets into 2020. The decline was led by a drop in ad spending by major fast-moving consumer goods producers, such as Procter & Gamble and Unilever, which account for 25% of Publicis’s revenues and are “particularly important” in its biggest market, the US. These clients are increasingly switching to digital marketing or bringing ad production in-house. Publicis boss Arthur Sadoun had promised to offset the decline by offering clients “technological tools” and “consulting”. That helped the group win key accounts at GSK and Fiat-chrysler late last year, but the unexpected weakness of its Q4 figures “sent a shock wave through the sector”; shares in rivals Omnicom, Interpublic and WPP all slid in sympathy. Investors in the “old-economy ad groups” are thoroughly “spooked”, said Alex Lawson in the London Evening Standard. No one holds out much hope of a quick recovery. The model’s had it, according to Johnny Hornby of The & Partnership, which is 49% owned by WPP. Reforming these “large, siloed” organisations to cope with the new age of digital agility is “like trying to turn around a supertanker”.
Renault/nissan: crisis talks
More than three months after their alliance was put under severe pressure by the arrest of former chairman Carlos Ghosn, on charges of financial misconduct, executives from Renault and Nissan have finally agreed to meet, said James Warrington in City AM. Not a moment before time. Last week, it emerged that lawyers for the two companies “have been locked in a bitter war of words”. While those acting for the French car company have questioned Nissan’s “commitment to the alliance”, Nissan has “hit back with accusations that Renault has not fully cooperated with the investigation into Ghosn”, reports the FT. The fact that Renault executives insist they have “yet to see conclusive evidence of Ghosn’s guilt” shows how “difficult it will be to make peace”, in spite of “public support for the alliance” from France’s President Macron and the Japanese PM, Shinzo Abe, said the FT. Ghosn continues to maintain that he is the victim of “plot and treason”. But there are signs that Renault is beginning to shift its stance. The company has been investigating payments linked to Ghosn’s lavish second wedding in 2016, which was held at the Palace of Versailles and formed part of a wider sponsorship agreement with the château. Ghosn has now offered to reimburse the full cost.
Smallbone of Devizes: out of pocket
When Smallbone of Devizes was at the height of its success, the company’s custom-fitted designer kitchens could be found everywhere from Notting Hill to New York, said Deirdre Hipwell in The Times. Smallbone – set up nearly four decades ago when three friends started buying and restoring Irish dressers and selling them in London – boasted fans including Oprah and Madonna. But many of its “well-heeled” customers have been left high and dry by the collapse of its parent company, Canburg, last year. According to administrator Grant Thornton, unsecured creditors are owed £18.9m, of which £9.7m relates to “deposits in respect of unfulfilled customer orders”.