Revenue Rises Modestly at Publicis Groupe in Q3

Company still expects 3-4 percent organic growth for the year

Publicis Groupe, citing slower growth in emerging markets, said third-quarter revenue rose 3 percent to $2.3 billion.

Organic growth increased 3.5 percent, down from 5 percent in the previous quarter, but showing an increase from the 2 percent rise reported in the year-ago period.

The Paris-based holding company is in the process of regulatory scrutiny as part of its planned merger with Omnicom Group. Today CEO Maurice Lévy shared few details about that process beyond what Omnicom chief John Wren offered yesterday when his company reported a net income decline in Q3.

With the release of his company's latest numbers, Lévy said that regulatory approvals are a “monumental task” but added that he doesn't foresee any major problems. South Korea and South Africa have already green-lighted the merger, he explained, and a filing has been made in the U.S. with the FTC. Also, conversations have begun with the European Union.

This week senior executives from the two holding companies will meet at the Four Seasons in Miami and some observers feel that overt gathering is indicative of the companies’ confidence the merger will be approved, given the FTC’s discouragement of such meetings prior to finalization of the transaction. 

“There’s the temptation factor, you can do all the advance preparations for a meeting like this with lawyers clearing presentations but it’s the chit-chat at the bar afterward that could be a problem," said one legal observer familiar with M&A initiatives. "You create that environment by having top people socialize after the sessions. Agency pitches, client pricing, client-relation issues, media-buying being planned for next year—these two companies are still competitors and these conversations would be anti-competitive in the industry.”

Some execs familiar with the meeting describe it as a "get-to-know" event with no formal agenda.

As for specifics about the third-quarter numbers, corporate chief Lévy said the results were “on track” and the company was “extremely satisfied” with them. Some signs of slight improvement finally came from the struggling Eurozone where organic growth inched up 0.4 percent, largely on the strength of the U.K., as France and Southern Europe continue to struggle.

Digital operations, which accounted for 39 percent of revenue in the third quarter, experienced a 12 percent increase in organic growth in contrast to analog media which declined. In North America, organic revenue rose 4.5 percent.

Emerging markets continue to slow down after high growth in recent years, showing a 1.5 percent hike in organic growth. (Publicis Groupe includes countries like Mexico, Indonesia, Singapore, South Africa and Turkey in that category.)

For the full-year, the company maintains its internal forecast of organic growth of around 3.5 to 3.6 percent, up from 2.9 percent in 2012. Those expectations were tempered, however, by current uncertainties in Washington and the cyclical vagaries of marketer spending in the fourth quarter.

“However, as is the case every year, the fourth quarter is always somewhat unpredictable given volatility levels at year-end,” Lévy said, in a statement. “Caution is required particularly since the global economic situation has come under the threat of government shutdown in the USA.”