Publicis Posts Rising Revenue but Warns of Continued Difficulties

13 November 2001

Despite unveiling a rise in underlying growth for the third quarter, French ad giant Publicis Groupe warned that it will not be immune from the worst advertising industry downturn in over two decades, with further falls in adspend on the cards.

Publicis posted Q3 revenues of E589 million ($520.87m), representing organic growth (excluding acquisitions such as Nelson Communications and Saatchi & Saatchi) of 1.6%. Including such purchases, growth stood at over 40%.

For the first nine months of 2001, the group booked revenues of E1.74 billion – up 59% with acquisitions and 4.2% without. However, chief executive Maurice Levy warned that full-year organic growth could come in at 3%, below the target range of 3.5% to 5%. He stuck by earlier forecasts that the operating margin for 2001 would be “in the region of 14%.”

Levy revealed that Publicis took restructuring charges of E20m in the first half, mostly due to the loss of 871 staff, but added that such charges would probably be higher in the second half as the group adapts to the ad slump. “We may have to take some more tough decisions,” he warned, but did not disclose whether these might include further layoffs.

In the wake of September 11, continued Levy, “advertising markets contracted sharply … a trend that will certainly continue at least through the end of this year”.

Nevertheless, Publicis was weathering the slump well, due to a broad portfolio of clients across various sectors and high satisfaction levels: “Without being immune, we have been less affected by the crisis and we will be on target or very close to our forecast numbers.”

In contrast, Havas Advertising is expected to post a fall in Q3 underlying sales of up to 5% later this week.

News source: Wall Street Journal