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Publicis Revenue Jumps on Digital Revenue, New Business After Recession
Publicis Groupe SA said first-half profit increased as marketers boosted spending, benefitting its largest ad companies, Leo Burnett, Publicis Worldwide and Vivaki, and digital revenue continued to grow.
Net income rose to 213 million euros ($277 million), or 95 cents a share, from 167 million euros, or 82 cents, a year earlier, Publicis said in a statement. Sales climbed 15 percent to 2.54 billion euros, while revenue excluding currency effects and acquisitions rose 5.3 percent. Profit had been predicted at 190.7 million euros on sales of 2.44 billion euros, according to the average estimates of analysts surveyed by Bloomberg.
Publicis said most of its top clients increased spending after cuts last year, and emerging-market and digital business is growing. The company said it would outperform the market this year. Publicis won $2.1 billion of net new business in the first half, including contracts from Chrysler, Canon and Fiat. It’s seeking investment opportunities in digital and emerging markets and said it identified many targets in China.
“We want to have a very special look at China because I believe this market has to become one of our most important,” Maurice Levy, chief executive officer of the Paris-based company, said by phone last night.
Levy said 2010 revenue at Publicis will beat that of 2008 before the recession, helped by currency fluctuations. Revenue in 2008 was 4.7 billion euros.
Publicis announced a strategic review of China, where its eyeing acquisitions and will form an ad research group with online operators including Web video platform Sohu.com and Baidu Inc., which owns China’s most popular search engine.
Global Recovery
The global advertising industry is recovering faster than expected, led by spending in the U.S. and Western Europe, ZenithOptimedia Group Ltd., a Publicis-owned media buyer, said last week as it raised its outlook for the sector for a second time this year.
Worldwide ad spending will increase 3.5 percent this year, compared with a forecast of 2.2 percent in April, ZenithOptimedia said.
“Clearly, what we see are that the main clients have increased spending and have increased their relationships with us, giving us more tasks and business,” Levy said.
Publicis said first-half revenue from operations in Europe rose 3.1 percent to 805 million euros, on an organic basis, while sales increased 6.6 percent in North America to 1.26 billion euros and 6 percent in Asia-Pacific to 286 million euros.
Digital advertising accounted for 28.1 percent of revenue, compared with 20.7 percent a year earlier.
Not Retiring
Levy, 68, said in June he had wanted to retire as CEO when his contract expires at the end of next year, though the board in June asked him to stay on while economic uncertainties continued.
WPP Plc, Publicis’s U.K. rival, said in June that revenue in the first five months rose 1.8 percent, led by a recovery in the U.S. and U.K. Revenue growth in the U.S. was more than 7 percent in April and May while the increase in the U.K. was more than 4 percent, WPP said.
Net debt at Publicis as of June 30 was 618 million euros, compared with 899 million euros a year earlier.
To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.
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