Publicis Groupe Posts Lower-Than-Expected Growth

Publicis Groupe today reported lower-than-expected first-quarter organic revenue growth of slightly more than 1 percent to $2 billion.

In releasing the results, the Paris-based holding company blamed tough comparisons in the year-earlier quarter, when it reported a 4 percent revenue gain, and continuing economic turmoil in the Eurozone.

Maurice Lévy

“As I predicted, 2013 is turning out to be a difficult and contrasted vintage, with, on the one hand, the United States consolidating their growth and, on the other, Europe suffering,” Publicis Groupe CEO Maurice Lévy said, in a statement. “Our first quarter ended satisfactorily and while 1.3 percent organic growth may seem modest, it is above our internal objectives and compares with the strong growth recorded in the first quarter of 2012. This is particularly true for Europe with a ten-points gap between 2012 first quarter (3.6 percent increase) and 2013 (6.5 percent decrease).”

Some analysts expected twice that level of organic growth in the first quarter: Deutsche Bank’s Patrick Kirby forecast a 2.7 percent increase while Pivotal Research Group’s Brian Wieser foresaw a 3.4 percent gain.

The first-quarter results were scheduled to come out after the stock market close in Paris but actually posted during trading hours today, causing the company’s stock to drop by 5.4 percent at one point. (The company explained that the Q1 investor relations presentation was accidentally posted on its website for a few minutes, triggering the release of an analyst's reaction to the data.)

In Europe, excluding Russia and Turkey, the company said that organic revenue slid 6.5 percent, characterizing conditions in France and in the continent’s southern countries as very “difficult.”

In North America, revenue climbed 4.4 percent. Fast-growing BRIC economies and those in Mexico, Indonesia, Singapore, South Africa and Turkey posted revenue gains of 5.5 percent. In the rest of the world, revenue rose about 3 percent.

Digital revenue now accounts for 37 percent of all revenue, up from 33 percent in 2012. Advertising trails at 29 percent, compared to 31 percent at year-end, while media is unchanged at 17 percent and revenue from specialized agencies and marketing services rings up 17 percent, down from 19 percent last year.

The holding company continues to warn that 2013 will be “difficult,” describing it as "a year of uncertainty, with a number of bridges to be crossed, especially for most of the European countries." However, the company believes the industry will grow by some 3 percent in 2013, with its own corporate forecast coming in at between 3.2 and 3.6 percent. Publicis said it expects its revenue will increase "slowly” in the first half of the year before picking up steam in the second half.