Publicis Profit Dropped 9.8% in 2009

Chairman-CEO Maurice Levy Predicts Return to Organic Growth This Year

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LONDON ( -- Publicis Groupe, the owner of Leo Burnett, Saatchi & Saatchi, ZenithOptimedia and Starcom MediaVest, reported a 9.8% fall in profit for 2009, with revenue down to $6.2 billion from $6.5 billion in 2008, but predicted a return to positive organic growth this year.

Maurice Levy
Maurice Levy Credit: Julio Piatti
The world's fourth-largest agency group, whose clients include Procter & Gamble and Walmart, reported -- like Omnicom and Havas last week -- a slowing rate of decline in the fourth quarter of 2009, when organic growth fell by 5.4% compared to a drop of 6.5% for the whole year.

In a briefing, Publicis Groupe Chairman-CEO Maurice Levy compared the recovery pattern to a Nike swoosh. "We are on the up-and-up, on the right trend," he said. "We are seeing a steady and continued increase in our numbers starting last summer, and the trend continued in January 2010. Our objective is to return to organic growth in 2010."

However, Mr. Levy made it clear that the crisis is not over yet, saying that the company will "continue to look for cost savings" in 2010, although the pay and hiring freeze will "thaw progressively" throughout the year. He also warned that the 15% operating margin will remain unchanged this year, because clients are still "very demanding" and continue to put pressure on agency fees.

North America performed relatively well for the group. Revenue rose slightly to $2.88 billion from $2.76 billion in 2008, helped by the fact that digital services in the region account for 34.6% of revenue. Without client General Motors bankruptcy, Publicis claimed organic growth would have declined 1.2% in North America, instead of a 4.3% loss for the year.

Publicis' lack of organic growth was offset by a good new business performance totaling $6 billion last year, including wins from L'Oreal, Honda and Carrefour. Mr. Levy also said he expects auto spend to come back to a "good level" in 2010.

In 2009 Publicis paid Microsoft Corp. $530 million in cash and stock to acquire Razorfish. The move was part of its plan to continue increasing digital's share of the group's revenue. The digital business grew about 7%, from 18.6% of total Publicis revenue in 2008 to 22.4% in 2009.

The Paris Stock Exchange was disappointed with the results, sending Publicis shares down 2.76% to $39 this morning.

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