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Publicis Sees 6.6% Organic Revenue Slide

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BOSTON Battered by the global recession thus far in 2009 but seeing some hope for improvement in the months ahead, Publicis Groupe today reported first-half revenue of $3.14 billion, down 6.6 percent in organic terms (excluding the impact of acquisitions and other factors) compared to the year-ago period.

Factoring out the impact of General Motors' bankruptcy, revenue dropped 5.4 percent in organic terms. At current exchange rates, the dip was about 0.8 percent.

Net income for the half year slid 13 percent to $238 million.

The second quarter was, as expected, especially rough for the Paris-based holding company, and revenue during the period fell 8.6 percent in organic terms to $1.61 billion.

Maurice Levy, chairman and CEO of the firm, said the 13 percent operating margin attained during the first half "was still quite good," especially in light of the estimated overall 13-15 percent drop in global ad spending.

The numbers were generally in line with most analysts' predictions.

Driving the performance, he said, was a 5.7 percent first-half improvement in digital activities, which account for more than 20 percent of the company's total revenue. Net new business gains in the first half totaled $3.2 billion. Those factors, along with what Levy called "strict cost controls" (worldwide staff cuts), to some extent mitigated the impact of the ongoing economic malaise.

In terms of global operations, only Latin America and the Africa/Middle East region were up, posting modest first-half revenue gains of 1.2 and 0.5 percent, respectively. All other regions were down: Europe fell 11.6 percent, Asia-Pacific 8.2 percent and North America (Publicis' largest market) 3.7 percent.

Earlier this week, Publicis estimated its "maximum exposure" in GM's bankruptcy proceeding at about $13 million, less than had been initially feared. The automaker remains a key client moving forward.

Looking ahead, the company said it expects the economy to bottom-out this month or next, with a slow recovery beginning in September and positive growth figures appearing in the middle of 2010.

Download Publicis' complete first-half results.