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Publicis Revenue Up 20%

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Publicis Group last week reaffirmed its expectations that it will achieve a 15 percent profit margin by the end of the year, even as the Paris-based holding company released 2002 revenue figures that showed a slight dip, excluding the acquisition of Bcom3.

Analysts covering the company continue to look for fallout from the dissolution of D'Arcy Masius Benton & Bowles. They are closely watching the $170 million Capital One review to see whether that client will leave the fold. The Kaplan Thaler Group in New York is Publicis' only competitor in the standoff.

"This would be the first high-profile loss, if they were to lose it," said Tom Deitz, an analyst with Merrill Lynch in London.

Deitz said it also remains to be seen how Publicis' promised synergies with Bcom3 will actually boost profits.

At the time the Bcom3 deal was announced last March, Publicis CEO Maurice Lévy said the company's goal was a 15 percent profit margin for 2003. Late last year, he revised that forecast, which he reiterated last week, saying the company hopes to be operating with a 15 percent margin only at the end of the year. He said Publicis will not be able to post that margin for the entire 12 months.

The 14 percent margin the company said it expected to post for 2002—which is for Publicis alone, without the addition of Bcom3 in September—would be flat from 2001.

Publicis' earnings statement is due to be released March 11, a representative said.

Publicis' 2002 revenue without Bcom3 was down nearly 3 percent, to $2.5 billion, from 2001, the company said last week. Organic growth was down about 4 percent.

Factoring in Bcom3, revenue came in at $3.1 billion, up 20 percent from $2.6 billion the year before. Bcom3's organic revenue dropped 5 percent for the year and 6 percent for the quarter.

"The year … was notable for its climate of prudence and uncertainty," Lévy said in a statement. Nonetheless, he said the company succeeded in merging Bcom3 and "positioning itself clearly among the 'top tier' communications groups."

Lévy also called the decision to close D'Arcy and parcel its accounts, primarily its many Procter & Gamble brands, among the company's other agencies "a decision that was, at once, both audacious and extremely logical.

"To date, this has been implemented as smoothly as possible and with very promising success," he said.

Revenue for the company in 2002 rose in Europe by approximately 15 percent over 2001, to $1.3 billion; in North America, the increase was 23 percent, to about $1.4 billion; in the Asia-Pacific region, 33 percent, to $257 million; in Latin America, 30 percent, to $111 million; and in the rest of the world, 8 percent, to $55 million.

Publicis' billings for 2002 were reported at $26.4 billion, up about 50 percent from the previous year's $17.6 billion, again because of the Bcom3 acquisition and expansion in media buying.

Publicis reported about $2.14 billion in net new business billings in 2002, including $482.3 million in the fourth quarter.