Publicis: Revs Up, Organic Growth Low

by Steve McClellan, Jul 20, 2012, 11:14 AM

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Publicis Groupe reported a 15.5% gain in revenue in the second quarter to nearly $2 billion. Organic growth, which excludes acquisitions and currency fluctuations, was much lower at 1.6%.

The holding company attributed the low organic growth (considered a key performance indicator for the advertising industry) to continuing economic turmoil in Europe, a tough comparision to the same period a year ago when it had 7.6% organic growth, and the loss of the General Motors media assignment in the quarter.

For the first half, revenue was up 14.3% to nearly $3.8 billion with net income of $336 million -- up 19%. Organic growth for the first six months was 2.8%. By comparison, Omnicom Group, reporting results earlier in the week, had organic growth of 5.1% for both the second quarter and the first half of the year.

Publicis Groupe chairman Maurice Levy said the low organic growth for the second quarter was attributable to “essentially non-recurring events.” Levy said that third-quarter organic results “should see a return to much higher growth, at rates far closer to our usual performance.”

Last year the company posted organic growth of 5.7% and in 2010 produced 8.3% organic growth.

“The world economic situation is both volatile and uncertain,” Levy stated. “We need to maintain the greatest possible vigilance regarding our cost and investment.” At the same time, he said a company priority was to strengthen its competitive profile, “in terms of our operations, our product and our penetration of certain marketers.”

The company didn’t provide a net new business win figure for the first half. It did report winning new business totaling $1.8 billion. That was net of losses with the exception of the largest -- departure of the $3 billion GM media assignment. Wins included Digitas’ pickup of the nearly $600 million Sprint business, as well as that shop’s Delta and MillerCoors account wins.

Digital now accounts for one-third of the holding company’s revenue -- up from 29% in 2011 -- and organic growth in that sector grew nearly 10% during the first half.

Publicis said it was able to maintain an operating profit margin rate of 13.5% for the half, which was unchanged from the prior-year period.

Despite recent ad spending and economic growth downgrade predictions, Publicis stated that its growth for the second half of 2012 “will be higher than in the first half-year.” The company said it would continue to focus on building its digital asset portfolio and expansion (through acquisition) into high-growth economies around the world. It restated its “medium term” target of generating 75% of its revenue from digital communications and high-growth countries.

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