Publicis Groupe: Economic crises impact organic growth

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Publicis Groupe: Economic crises impact organic growth
Publicis Groupe: Economic crises impact organic growth

Publicis Groupe had a 15.5% gain in revenue in the second quarter to nearly $2 billion, the holding company stated in its H1 2012 earnings report. Organic growth was significantly lower, weighing it at 1.6%.

In a video Q&A, Publicis CEO Maurice Lévy says the lag in organic growth stems from three factors: the January loss of a global contract with General Motors, the sharp slowdown in healthcare communications, and the financial cuts that lead to postponed investments within TMT (technology, media and telecommunications), healthcare, and digital sectors.

“This has had a strong impact on the second quarter,” Lévy says, adding Publicis does not forecast a continued downtrend in organic growth. “For 2012, H2 should be higher than H1.  Our objective for 2013 is to build on our two strong pillars: the digital market and the emerging market,” Levy says.  The report cites the financial crisis in Europe as another contributing factor to the slow growth.

Digital accounts for 33.2% of group revenues, constituting a 9.6% growth, which Mr. Lévy anticipates will return to double-digit growth in September, and maintain that pace for the remainder of 2012 and for 2013.  

According to the report, growth in the U.S was 2.6% in the first half and 1.8% in the second quarter, with revenue of $1.8 billion.  Lévy says that Publicis' “level of confidence in the U.S.” is good, and expects growth to be solid throughout the rest of the year, noting the surge of advertising regarding the Olympic games, “which will continue through mid-August” and help U.S. growth throughout the year.

In Lévy's February earnings call for full-year 2011, in which Publicis announced its revenue had increased 7.3% to $7.67 billion, the CEO said he expected advertising spend increases due to the Olympics, the European Cup and the U.S. elections. He also worried about uncertainties in Europe and sovereign debt.

Publicis Groupe owns and operates major networks including Publicis Worldwide, Leo Burnett, Rosetta, and Saatchi & Satchi.

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