2nd UPDATE: Publicis Rises On Strong 1Q, Good Outlook
By Daniel at 29 April, 2008, 6:27 am
PARIS (Dow Jones)–Publicis Groupe S.A.’s (PUBGY) shares rose sharply Tuesday
after the Paris-based advertising group reported better-than-expected first
quarter revenue and said it remained confident for the rest of the year.
Publicis, which owns the Saatchi & Saatchi advertising agency and media planning
firm Zenith Optimedia, posted 5.4% growth in organic revenue, which strips out
acquisitions, disposals and currency movements, beating analysts’ forecast of
3.7% growth.
The strong trading update comes four days after WPP Group PLC (WPPGY), the
world’s second-largest advertising and marketing services group by sales,
indicated that growth in Western and Continental Europe slowed in March.
Publicis Chief executive Officer Maurice Levy confirmed on a conference call that
2008 organic revenue growth and second-quarter revenue growth will be above that
of last year, relieving investor concern that the turmoil in financial markets
and higher commodity prices could hurt advertising agencies’ performances.
Publicis reported 3.1% organic revenue growth in 2007 and a 0.5% organic revenue
growth in the second quarter of last year.
Levy said Publicis hadn’t witnessed a slowdown in March, adding that he expects
the company to be among the best performers in its peer group. “We have a good
feeling for the second quarter,” Levy said. So far, “April was in line with what
we have seen in March.”
At 0920 GMT, Publicis shares were up EUR1.04, or 4.14%, at EUR26.18, just off its
intraday high of EUR26.50, but outperforming a 0.2% drop in the CAC 40.
On a reported basis, Publicis said revenue remained almost flat at EUR1.061
billion in the three months to March 31, compared with EUR1.059 billion a year
earlier, benefiting from the contribution of U.S. digital firm Digitas and new
business wins. The figure beat analysts’ forecasts of EUR1.05 billion despite a
negative currency impact of EUR79 million, of which 77% was due to the weakening
of the dollar. More than 50% of group revenue is from North America and the U.K.
Publicis said its healthcare communications business was still adversely impacted
by decreased spending in the sector, but that it should be back toflat growth in
the third quarter and positive growth in the fourth quarter of the year.
Net new business during the quarter totaled $1.9 billion, notably boosted by
Zenith’s L’Oreal (LRLCY) account win and Publicis’s communication agency
Starcom’s Bank of America (BAC) account win.
Lehman Brothers said the first quarter looked strong, with Europe showing strong
growth and none of the concerns cited by WPP (WPP.LN) on Friday.
Levy also reassured investors on the Olympic Games, one of the key advertising
events of the year along with the U.S. election. He said despite negative press
over China and Tibet, clients weren’t cutting advertising spending.
Levy also said the group was looking at small targets, especially in the digital
sector, in marketing services and in emerging markets, but denied Publicis was
currently studying big acquisitions.
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