Publicis 2011 Sales Jump Beats Estimates on Web, Latin American Business

Publicis Groupe SA (PUB) reported 2011 revenue growth that beat analyst estimates as France’s largest advertising agency sold more digital ads and expanded into faster-growing markets outside Europe such as Latin America.

Sales rose 7.3 percent to 5.82 billion euros ($7.72 billion) in 2011, the Paris-based company said in a statement today. That beat the 5.78 billion-euro forecast by analysts in a Bloomberg survey. Earnings rose to 2.64 euros a share from 2.35 euros a year earlier.

Publicis has bought smaller companies in digital and emerging markets as its European business is hampered by the sovereign debt crisis. Publicis agreed to buy at least 21 companies last year, according to Bloomberg data. The expansion added employees in markets such as Brazil and China with booming economies as well as companies that specialize in online marketing.

“In a context of sovereign debt crisis and economic slowdown, Publicis has not only outperformed the market, more remarkably it has improved on its own outstanding performance of 2010,” Chief Executive Officer Maurice Levy said. “We should be able to continue to achieve strong, sustainable and profitable growth.”

Publicis shares fell 0.2 percent to 39.72 euros at 10:37 a.m. in Paris trading. The stock rose 12 percent this year before today.

Regional Growth

Revenue in North America, where Publicis gets the largest portion of its sales, grew 4.4 percent to 2.72 billion euros. The fastest growing markets were Latin America, which gained 32 percent last year, and Asia, up 12 percent. Excluding acquisitions, total revenue rose 5.7 percent last year.

Levy has said some customers are scaling back plans for 2012 spending amid recession fears. Still, the industry is expecting a boost from the summer Olympics, the U.S. presidential elections and the European soccer championships this year.

“We’ve seen our clients cutting last quarter, less than what happened in 2008, and we see some cautious investments in the beginning of this year,” Levy said in an interview with Bloomberg TV. Still, Levy said he expected Publicis to maintain a 16 percent operating margin -- the percentage of sales left over after personnel expenses, depreciation, amortization and other costs. “It won’t be very easy. It will require some efforts from our teams, but I believe we will still be the best performer in 2012,” he said.

Acquisitions

European sales fell 2.5 percent in the fourth quarter from a year earlier as customers in western and southern Europe cut spending, Publicis said. The company froze hiring and focused on cutting personnel expenses to protect margins during the downturn.

Still, Publicis said it expects to grow faster than the market in 2012 as it works to double its business in China and adds to operations in other high-growth regions and businesses. The French company said it will continue to make “targeted acquisitions.”

While the company is shying away from large acquisitions, it is in negotiations with a few companies in China and India that specialize in digital marketing, Levy said.

In December, ZenithOptimedia, a Publicis-owned company that publishes research on advertising, lowered its forecast for the industry’s performance this year to 3.5 percent growth from an initial prediction of 4.1 percent.

Last month, the company lost its account with General Motors Co. after the world’s top-selling carmaker entrusted its $3 billion in annual advertising spending to smaller competitor Aegis Group Plc. The account represented about 0.5 percent of Publicis’s annual revenue, the company said.

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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