Publicis Sales Boosted by Growth in Brazil, Russia and India

Publicis Groupe SA, which cut its 2014 sales forecast after a failed merger with Omnicom Group Inc., reported fourth-quarter revenue that beat estimates because of growth in Brazil, Russia and India.

Sales increased 11.5 percent from a year earlier to 2.15 billion euros ($2.43 billion) in the three months through December, the world’s third-largest advertising company said in a statement Thursday. That compared with analysts’ average estimate of 2.06 billion euros. The shares rose 4 percent to 69.74 euros in Paris at 9:10 a.m.

Organic revenue growth for the quarter -- which strips out acquisitions and currency swings and is the advertising industry’s preferred measure of performance -- was 3.2 percent. For the whole of 2014 organic sales increased by 2 percent, compared to an initial forecast of 4 percent a year ago.

Publicis, owner of ad agencies including Saatchi & Saatchi and Leo Burnett, bought U.S. digital agency Sapient Corp. for $3.7 billion in November to help drive growth, which last year lagged behind peers such as WPP Plc and Omnicom.

Chief Executive Officer Maurice Levy said at a briefing on Wednesday night that Publicis will gradually return to better growth this year, notably in the second half.

“Organic growth hasn’t met our expectations this year,” he said. “But it did prove slightly better than we announced, shored up by a stronger fourth quarter.”

Omnicom Fallout

After abandoning a $35 billion merger with Omnicom in May that would have created the world’s largest ad company, Publicis cut its 2014 sales forecast in November and said the company’s performance weakened because managers were distracted by the failed combination.

After buying Sapient, Publicis predicted half its sales will come from digital operations this year.

Full-year revenue rose 4.3 percent to 7.26 billion euros. Net income attributable to the group fell 9 percent to 720 million euros, while earnings per share fell from 3.67 euros in 2013 to 3.22 euros. Digital activities accounted for 42 percent of revenue in 2014 and the company won new business in the year from clients including Puma, Honda and American Express.

Publicis said in December that revenue will grow at 2 percentage points above the industry average each year from 2016, with digital operations rising to 60 percent of sales in 2018. It predicted the operating margin to rise to between 17.3 percent and 19.3 percent of sales in 2018, compared with 15.3 percent in 2012.

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