BOSTON Despite the weak U.S. dollar and uncertainty about the long-term economic outlook, Publicis Groupe beat most analysts estimates and posted a 5.4 percent organic revenue gain in the first half of 2008. If the impact of currency fluctuations and acquisitions are taken into account, its performance was basically flat compared to the first six months of last year. The company got a boost from its digital businesses and strength in emerging markets.
The Paris-based holding company saw its first-half net income slide 3 percent to just above $300 million on revenue of $3.54 billion. Publicis attributed the dip in income to the weakness of the dollar against the euro.
Organic growth of 5.4 percent was, however, higher than expected, with most analysts predicting 5.2 percent. Publicis was generally upbeat about its performance, especially since organic growth for all of last year was slightly more than 3 percent.
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Looking ahead, chairman and CEO Maurice Levy said in a statement that "in a somewhat depressed world economy, and against a backdrop of financial unease, we have every reason to believe that we can better resist [a backslide] by virtue of our strong positions in high-growth markets and sectors."
The company said its digital businesses and emerging markets continue to drive growth and noted "the remarkable success" of Digitas and Publicis Groupe Media for helping boost its organic numbers.
Digital businesses now account for nearly 19 percent of the company's overall revenue, up from 13 percent in the first half of last year. Emerging markets grew 11 percent and generated more than 22 percent of Publicis' revenue compared to 20 percent in the first six months of 2007.
The goal is for digital businesses and emerging markets to each account for a quarter of all revenue by 2010. In a move toward that end, the company last month launched VivaKi, a pan-agency digital initiative designed to foster cooperation and efficiencies.
Revenue grew in all geographic regions, but really soared in the Middle East and Africa (up 17 percent), while North American and European growth lagged somewhat at 5.5 percent and 3.5 percent, respectively.
The operating margin rate was 15 percent in the first half of '08, better than the company expected and on par with the first six month of last year.
Publicis' other holdings include its namesake agency network, Saatchi & Saatchi, Leo Burnett and Starcom MediaVest Group.
On Tuesday, Publicis rival Omnicom Group reported a strong first half in which revenue rose more than 11 percent.