Publicis Sales Rise on Digital, North American Businessby
French ad-agency reports higher-than-expected sales growth
CEO Maurice Levy forecasts `modest' growth this year
Publicis Groupe SA, whose ad agencies work for brands such as Cadillac and Sony PlayStation, reported better-than-estimated sales growth in the fourth quarter, bolstered by its digital operations and “very good dynamics” in North America.
Revenue climbed 2.8 percent in the final three months of the year, boosting full-year organic growth to 1.5 percent, the Paris-based company said in a statement Thursday. That beat its own forecast from October of 1 percent. Organic revenue strips out acquisitions and currency swings and is the advertising industry’s preferred measure of performance.
The stock rose as much as 7.8 percent, the steepest intraday advance since July 23, 2009, and was up 3.9 percent to 54.75 euros at 11:35 a.m. in the French capital.
“The fourth quarter, which is always more difficult to anticipate because of clients’ budget adjustments, turned out to be better than expected,” Chief Executive Officer Maurice Levy said in the statement. Organic growth in North America was 6.3 percent in the period and growth in the digital segment was 8.8 percent.
Publicis, which owns ad agencies including Saatchi & Saatchi and Leo Burnett, said it expects “modest organic growth” this year. The company earned 52 percent of its revenue from digital operations in 2015.
Reported revenue rose 27 percent to 2.73 billion euros ($3.1 billion) in the three months through December, compared with analysts’ average estimate of 2.68 billion euros.
“Publicis needed – first and foremost – to show it could return to adequate growth,” analysts at Bernstein including Claudio Aspesi said in a note to clients. “The fourth-quarter results show that the structural over exposure to the U.S. digital markets is finally starting to pay off."
For the fourth quarter, Publicis lodged a 44 percent increase in reported sales from North America.