Publicis Promises Better Sales Growth After Poor YearRodrigo Orihuela and Kristen Schweizer
Publicis Groupe SA Chief Executive Officer Maurice Levy said he will improve revenue growth after distractions from a failed merger led the French advertising company to cut its 2014 sales forecast.
“We are not delivering the kind of growth we are used to and not what we should do,” Levy said yesterday at a conference in Barcelona organized by Morgan Stanley. “We are confident the situation will improve remarkably next year.”
The company, which owns ad agencies including Saatchi & Saatchi and Leo Burnett, is revising its 2018 business plan and will present it to investors on Dec. 4, he said.
Publicis, which this month agreed to pay $3.7 billion for the U.S.’s Sapient Corp. to drive digital operations, isn’t planning further major acquisitions for now and will focus on increasing sales, Levy said. He said on Oct. 23 that revenue at the Paris-based company didn’t meet expectations because managers were distracted. In May, Publicis abandoned a $35 billion merger with peer Omnicom Group Inc. that would have created the world’s largest ad company.
“The focus is to fix the organic growth of Publicis, integrate Sapient and to make sure it is generally the kind of growth that the market is expecting form us,” Levy, 72, said yesterday.
He added that Publicis will soon deliver 42 percent of profits to shareholders, a figure Levy said was slightly above the industry average.
The company’s shares rose 0.3 percent to 57.23 euros at 9:04 a.m. in Paris, paring the decline to 14 percent this year.
Publicis said in October that full-year organic sales, which strip out acquisitions and by which the ad industry gauges performance, will be similar to the 1.5 percent growth for the first nine months. That compared with a February projection for more than 4 percent.
Publicis, the third-largest advertising company, will keep its guidance for improving growth and margins and further details will be released to investors on Dec. 4, Levy said yesterday. The company outlined a plan last year to reach an operating margin of 18 percent to 20 percent by 2018, from 16.1 percent in 2012.