Publicis targets recovery after Omnicom deal breakdown

Friday, 20 February 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: France’s Publicis promised business would pick up in the second half of this year as the advertising agency recovered from a tough 2014 marred by a failed mega-merger with U.S. peer Omnicom. It reported fourth-quarter organic sales growth of 3.2% on revenue of 2.15 billion euros ($2.4 billion), helped by a rebound in emerging markets like Brazil and China, as well as higher demand from advertisers across all sectors from cars to consumer goods.

The strong finish to the year brought annual organic sales growth to two% on revenue of 7.26 billion euros, slightly ahead of analyst expectations. Publicis Chief Executive Maurice Levy is trying to win back investor support after the agency’s growth lagged behind competitors because of the fallout from the failed Omnicom deal. Key to the promised recovery is building on the $3.7 billion acquisition of digital ad specialist Sapient, which was completed last week. Levy said Publicis was already hard at work on the integration and would soon benefit from the added strength of Sapient in on-line ads and consulting. “Around the end of this year, we will begin out-performing our rivals again,” he said at a press briefing. Levy said that he expected Publicis to grow faster than the 3 to 3.5% sales growth forecast for the advertising agencies globally. Omnicom issued a relatively cautious forecast for organic growth this year of about 3.5%, slowing from 5.7% last year, saying the stronger dollar would dent profitability. Publicis, which is the third-largest global advertising holding company after WPP and Omnicom, plans to pay a dividend of 1.20 euros per share, up from 1.10 euro in 2013. Asked about the prospects for the global economy, Levy sounded upbeat despite the brewing standoff between Greece and the European Union over its debt and the conflict in Ukraine. “Business leaders in Europe are relatively calm about Greece and believe that a solution will be found. They are more focused on the tentative signs of a growth recovery in the region,” he said. But the real motor of global economic activity this year will remain the United States, the veteran CEO said. “The U.S. is setting the rhythm with solid growth rates and lower unemployment, and this should benefit us since about half our business is there.”