Profit, revenues down at Publicis; digital continues to grow

PARIS: The recession is taking its toll on earnings at Publicis Groupe, the company's CEO, Maurice Levy said today when it reported second quarter earnings. The Paris-based holding company's net income for the first half of the year fell 13% to $237.3 million from $273.6 in the comparable 2008 period.

PARIS: The recession is taking its toll on earnings at Publicis Groupe, the company's CEO, Maurice Levy said today when it reported second quarter earnings. The Paris-based holding company's net income for the first half of the year fell 13% to $237.3 million from $273.6 in the comparable 2008 period.

Organic growth for the first half of 2009, which ended June 30, was down 6.6%, impacted in part by client General Motors' problems. However, the company said a nearly 6% growth in digital helped provide "a cushion against the overall market decline." Revenues dipped slightly to $3.1 billion, compared to $3.2 billion in the year ago period.

For the second quarter, revenues were $1.6 billion, compared to $1.7 billion in Q2 of 2008, a 2.7% decrease. Organic growth for the quarter was also down 8.6%, year-over-year.

The Specialized Agencies and Marketing Services division (SAMS), which is in the process of being reorganized and houses the Groupe's PR entities including MS&L and Kekst & Co., as well as digital activities, contributed 42% of revenues; 37% came from advertising; and 21% stemmed from the media division.

Despite the declines, Levy remained optimistic about the state of the company and what the future portends. He estimated the decrease in global advertising spending to be “between 13% and 15% for the first half of the year,” but said Publicis fared relatively well.

“Even so, we did better than the market in the second quarter, with digital, healthcare, and emerging markets driving our revenue,” said Levy in the earnings release. Among the digital activities in the first half were the April acquisition of a Swiss interactive communications agency, Nemos, and an agreement with Microsoft, signed June 25, that will continue to aid its digital growth. He attributed the company's 13% operating margin to “strict cost control.”

The company reported $3.2 billion in net new business for the first half of the year as well.

Levy was also hopeful about Publicis' financial situation with relation to GM. The company had allocated $12.8 million for exposure caused by GM's Chapter 11 filing.

“However, payment received so far and steps taken by our client strongly suggest not only that this provision will suffice, but also that we can take an optimistic view of the future,” Levy said in a statement.

Publicis issued a release on July 21 about GM in anticipation of the earnings announcement. GM emerged from bankruptcy on July 10.

PRWeek UK is also reporting that Publicis Groupe' recently appointed PR chief, Olivier Fleurot, will integrate MS&L and Publicis Consultants under his leadership. According to the story, Fleurot said he had no plans to appoint individual CEOs following the departures of MS&L's Mark Hass and Publicis Consultant's Eric Giuily. Rather, he wants the two entities to "cooperate," with one taking a lead role when necessary.

"We need to join forces to match the critical mass of other global agencies," he told PRWeek UK.

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