Publicis Suffers Organic Revenue Slide

BOSTON Account losses and poorly performing healthcare clients contributed to weak first-half and Q2 performances by Publicis Groupe, the Paris-based holding company said today.

Revenue for the first half of 2007 was about $3.1 billion, an increase of 1.5 percent in organic terms compared to nearly 7 percent in the same period last year. (Organic growth factors out acquisitions and currency fluctuations.) Net income for the first half was basically flat at $270 million compared to the first six months of 2006.

For Q2, Publicis posted global revenue of $1.63 billion, up about 5.5 percent from the same period in ’06, but flat in terms of organic growth.

“Organic growth in the second quarter, and for the first half as a whole, does not reflect what Publicis Groupe has regularly achieved nor its potential,” said company CEO and chairman Maurice Lévy, in a statement. “All other indicators again showed improvement: new business, margin, free cash flow and level of debt.”

He added, “None of these problems encountered during the first half-year are of a structural nature. They were the result of issues that for the most part have already been resolved.”

Net new business in the first half was $3.5 billion and included assignments from Procter & Gamble’s Oral B, Wal-Mart and Wendy’s.

However, some late-2005 and 2006 client losses, such as GM’s Cadillac, the U.S. Army and Sprint, had a negative impact on the overall numbers. Additionally, problems specific to the pharmaceutical sector led to the cancellation of “substantial campaigns” from Publicis Healthcare and Publicis Events, the company said, though it did not get into specifics.

The recent wins, the company said, should help the company achieve stronger organic growth in the second half once the new revenue kicks in. Overall, the company now projects a full-year organic uptick between 4-5 percent, down slightly from its earlier prediction of 5 percent.

In the first half, organic growth was especially weak in North America and Europe (basically flat in both regions), though growth was more than 5 percent in Asia-Pacific and Latin America and over 10 percent in all other regions.

Publicis rival Omnicom Group on Tuesday reported strong numbers, posting 11 percent gains in both quarterly and first-half revenue.

Publicis’ holdings include Fallon, Leo Burnett, Saatchi & Saatchi, Starcom MediaVest and Digitas.