 2nd Update : Publicis 3Q Organic Rev Growth Dn;Keeps '08 Goals |
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(Adds executive comment, detail.)
PARIS (Dow Jones)--French advertising firm Publicis Groupe SA (13057.FR) Tuesday reported weaker third-quarter organic revenue growth and said it expects a further slowdown in the fourth quarter, but it maintained its 2008 targets despite the deepening financial crisis.
For 2009, however, Publicis said it expects a "marked slowdown" of the advertising industry. "2009 will be a tense year," said chief executive Maurice Levy, with the biggest challenge in mature markets.
However, Levy said the group was well equipped to outperform the market in 2009 thanks to its exposure to the digital sector and emerging markets.
"We expect a slowdown of growth in the fourth quarter, but we don't know the amplitude of it," Levy also said, while conceding the third quarter had seen a slowdown, particularly in the automobile sector.
Still, Levy said for the full-year 2008, the group still aims for organic revenue growth to be above the 3.1% achieved in 2007, and an operating margin of 16.5%.
At 1015GMT, shares were down 0.6% to EUR15.7 in an overall higher market.
In a statement, the group said organic revenue growth, a closely watched metric in the advertising industry that strips out acquisitions, disposals and currency movements, stood at 3.9% for the quarter ended Sept. 30, versus 4.6% a year earlier.
The figure was above an average forecast of 3.4% from five analysts polled by Dow Jones Newswires.
Revenue for the period was EUR1.11 billion, down slightly from EUR1.12 billion last year, as a boost from the digital sector and emerging markets offset a more negative impact from deteriorating economic conditions.
When asked if last week's profit warning from automaker Renault SA (13190.FR), one of Publicis' top clients, worried him, Levy replied, "we have experienced similar difficulties in the past and hope we will re-emerge from them even better this time."
"The biggest question is how the 4Q slowdown will feed into 2009," said Kepler analyst Conor O'Shea. He maintained his buy rating on the stock and EUR30 price target.
According to Levy, Publicis is on track to achieve its targets of making 25% of revenue each from digital and emerging markets by 2010. In the first nine months of the year, emerging markets accounted for 22.7% of revenue, up from 20.9% a year earlier, while digital revenue represented 18.9% versus 13.6% in 2007, Publicis said.
Overall, Levy said his group's financial situation was "solid" at least until 2012, with EUR2.2 billion credit lines and cash available as of Sept. 30.
"We have no worries in the short-term," Levy said.
As of Sept. 30, the group's net debt was EUR1.25 billion, taking into account EUR181 million of share buybacks since the beginning of 2008, Publicis said.
Before Tuesday, Publicis shares had fallen about 41% since the start of the year on general concerns over the outlook for the advertising industry.
The Paris-based advertising group owns advertising agency Saatchi and Saatchi, media planning firm Zenith Optimedia and digital agency Digitas.
In a trading statement, U.K advertising group Aegis Group PLC (AGS.LN) Tuesday also gave a more cautious outlook for the fourth quarter and the full year, sending its shares down over 7%. Peer WPP Group PLC (WPP.LN) reports third quarter results Thursday.
Company Web site: www.publicisgroupe.com
-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 40; ruth.bender@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=h4DiqbZI5m8YiTabAal5Ag%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
October 28, 2008 06:39 ET (10:39 GMT)
Copyright (C) 2007-2008 DowJones.com |
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