Publicis Results Confound Morgan Stanley’s Doomsaying

14 May 2003

Investment bank Morgan Stanley got it wrong second time in a row in divining the quarterly results of major advertising companies.

Having earlier this year significantly underrated WPP Group’s performance in a guidance note [WAMN: 28-Apr-03], the bank last week prophesied similar gloom for Publicis Groupe.

The MS note [WAMN: 09-May-03] prophesied that that while Publicis’ Q1 organic revenues would fall by only 1.7%, the strength of the euro would devastate the group’s income, dragging down global revenues by twelve per cent.

But Publicis’ actual performance, like that of WPP, effectively raised two fingers to the entrail-rakers by reporting a 57% year-on-year leap in aggregated revenues – while organic revenues declined by only 1.2%.

But MS got it right in one respect. The agency holding company – number four in AdAge’s 2002 world rankings – was hard hit by currency fluctuations.

Q1 was marked by the significant appreciation of the euro compared to several other currencies, and in particular the US dollar and the UK sterling pound. The negative translation impact on exchange amounted to €143 million ($164.09m; £102.11m), of which €104 million were due to the dollar’s decline alone.”

Noting that “the first quarter featured the best organic growth since the fourth quarter of 2001,” chairman/ceo Maurice Levy was in upbeat mode as to future prospects. “Especially encouraging is that Publicis is scoring exceptional new business successes,” he said.

“During the first quarter of this year, we won nearly one billion euros of new accounts, which should assure the performance we expect in the second half of the year and make up for possible continued weakness in the European markets and for possible consequences of the SARS epidemic in China.”

Data sourced from: Multiple origins; additional content by WARC staff