Publicis First-Quarter Revenue Increases 8%, Lifted by Digital Businesses

Publicis Groupe SA said first- quarter sales climbed 8.1 percent, led by revenue from digital and emerging market operations.

Sales climbed to 1.16 billion euros ($1.55 billion) from 1.08 billion euros a year earlier, the Paris-based company, which owns the Leo Burnett and Saatchi & Saatchi ad agencies, said in a statement today. Digital operations accounted for 27 percent of revenue, and for 47.1 percent when combined with emerging markets business.

Publicis, the world’s third-largest advertising company, said investment in digital activities and emerging markets gave it some resilience during the recession. Salaries and hiring, which have been frozen since late 2008, will gradually increase.

“I would say I have considered optimism,” Chief Executive Officer Maurice Levy said in an interview. “I do see some signs of recovery and I see that most of our clients are investing but there is still some fragility in some sectors and we have to be cautious.”

Publicis shares rose 1.3 percent to 33.89 euros at 5:18 p.m. in Paris trading.

Levy, 68, will not seek another term when his contract expires at the end of 2011, a move he said has been publicly known for three years. Levy joined the company in the early 1970s and has served as chief executive officer since 1987.

“I am not leaving now and we will see what will happen during the course of next year,” Levy said. “There will be a solution at the appropriate time.”

New Business

The French company said today booked $1.2 billion of new business during the first quarter, from clients including Goodyear Tire & Rubber Co., Nestle SA and Telefonica SA.

Levy said he’s continuing to seek acquisitions of small and medium-sized businesses that fit with Publicis’s presence in digital and emerging markets.

“The company has liquidity of 3.6 billion euros so we are in a very solid financial position,” he said, adding Publicis is currently in talks with some companies.

Asked whether Publicis is seeking a majority stake in South African business SA Starcom MediaVest, Levy said the company’s “philosophy is to prefer having control of our operations.”

First-quarter sales in Europe during the first quarter fell 1.5 percent, excluding acquisitions and currency swings, with countries including Germany declining. France and the U.K. grew.

Debt Declines

North American revenue rose 4.8 percent on growth in digital services and business from retail, financial services and health-care industries, while the automotive sector stabilized.

Net debt fell to 707 million euros at the end of March from 1.1 billion a year earlier.

Publicis shares gained 17 percent this year in Paris trading before today, giving the company a market value of 6.6 billion euros.

WPP Plc, based in London, is the world’s largest advertising company and Omnicom Group Inc. is second-biggest.

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.

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