Publicis Groupe Reports Slowdown in Q2 Organic Growth

Predicts higher third quarter

Publicis Groupe said growth in the second quarter was slowed by continuing weakness in the Eurozone, the end of the company's global media-business contract with General Motors and a downturn in Publicis' healthcare marketing business.

“The world economic situation is both volatile and uncertain,” Publicis Groupe chief Maurice Lévy said in a statement. “Our third quarter should see a return to much higher growth, at rates far closer to our usual performance.”

The Paris-based holding company reported organic growth of 1.6 percent in the second quarter, down from a 4.6 percent increase in Q1 and a 7.6 percent rise in the year-ago quarter. The lower growth is not a surprise. Earlier in the spring, when Publicis announced its first-quarter results, it warned of a second-quarter slowdown.

In the second quarter, organic growth in revenue declined 1.7 percent in Europe while rising 1.8 percent in the U.S. despite the loss of GM media business at Publicis’ Starcom unit. Organic growth increased 7.8 percent in the buoyant economies of BRIC countries and those in the MISSAT, which is composed of Mexico, Indonesia, Singapore, South Africa and Turkey.

For the first half, Publicis said revenue rose 14.3 percent to $3.75 billion, with organic growth climbing 2.8 percent. Net income for the period was $335 million.

Earlier this week, John Wren, CEO at Omnicom, Publicis’ American rival, also cautioned about the ongoing problems in Europe as he discussed his company’s second-quarter results, describing the situation there as remaining “tenuous”.

In the second quarter, Omnicom’s net income climbed 2.8 percent to $283 million on a 2.1 percent rise in revenue to $3.6 billion. For the first half, net income increased 2.2 percent to $487.3 million on a 3.5 percent hike in global revenue of $6.8 billion.