Publicis First-Half Profit Rises 15% as Sales Beat Estimates

Publicis Groupe SA (PUB), the third-largest advertising company, said first-half profit rose 15 percent, spurred by growth in the U.S. and revenue from digital activities.

Net income climbed to 314 million euros ($411 million) from 273 million euros a year earlier, Paris-based Publicis said in a statement today. Revenue rose 8.7 percent to 3.35 billion euros, topping the 3.31 billion-euro average of five analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Maurice Levy is fueling growth at Publicis by acquiring digital ad agencies as well as companies in emerging markets such as China. The owner of the Leo Burnett and Saatchi & Saatchi ad agencies is targeting operating profit margins of 18 percent to 20 percent by 2018, from 16.1 percent in 2012, Levy said in April.

Publicis “intends to continue its policy of investing in the digital sector and in high-growth economies,” the company said in its statement. Its “robust financial situation” gives Publicis “the means to successfully implement its strategy.”

The shares rose 2.8 percent to 59.49 euros at 9:40 a.m. in Paris, taking the company’s market value to 12.6 billion euros.

Growth Forecast

Publicis said it forecasts organic growth for the year of around 3.6 percent, the top end of the range it had given previously, helped by a recovery in the U.S. and growth in digital operations, which now account for 37 percent of sales.

Organic growth in North America continued with 6.1 percent gains in revenue, despite the loss of an advertising contract last year with General Motors Co. In Europe, it dropped 3.6 percent for the period. Germany saw 3.5 percent growth in the first half, and the U.K. and France saw slight growth for the second quarter, though both were negative for the first half.

Southern European countries “were still distinctly in decline,” with Italy posting a 14.2 percent drop and Spain 8.4 percent, Publicis said.

While 2013 won’t be a “massive investment year,” Publicis has a range of 400 million euros to 600 million euros to spend on acquisitions, Levy said in April.

Net new business during the first half totaled $2.8 billion, with brands including Dunkin’ Donuts, Sprint, PayPal and Dairy Queen.

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

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

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