Publicis posts 2.6% net drop

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Accompanied by a slightly grim refusal by chairman-CEO Maurice Levy to forecast 2003, Publicis Groupe posted weak results for 2002 in spite of its acquisition of Bcom3 Group.

The parent company of Saatchi & Saatchi and Fallon Worldwide posted net income of $162.4 million, down 2.6% for the year, or up 10.2% to $248.4 million before accounting for goodwill. The results include the operations of Bcom3 after it merged into Publicis Sept. 24, making Publicis the fourth-largest holding company. Bcom3 also helped Publicis billings to grow 48.5% to $25.9 billion. Net new business for the year was $2.3 billion.

smooth progress

If Bcom3 had been included in results from Jan. 1, revenue would have totaled $4.48 billion, up 0.7% over the two companies' 2001 totals. But net income would have increased 3.6% to $163.5 million. Publicis reported $3.1 billion in 2002 revenue, a 20.2% increase, mainly due to the addition of Bcom3. Publicis-only revenues were $2.48 billion, down 2.8%.

Mr. Levy told analysts last week the merger with the parent of Leo Burnett Co. and now-shuttered D'Arcy, Masius, Benton & Bowles is progressing smoothly. The consolidation of Bcom3's corporate structure into Publicis' should be complete in the next 12 months and the merger of several D'Arcy offices into Burnett and Publicis should be done by the first half of `03, he said.

Mr. Levy sidestepped a question regarding Zenith Optimedia-a joint venture owned 75% by Publicis and 25% by Cordiant Communications Group Worldwide. Cordiant has an option to sell its stake to Publicis as of Jan. 1, 2004. Mr. Levy stressed the option states a maximum sale price of $121 million, but would not say how much he would actually be willing to pay.

Mr. Levy did not offer any forecast for 2003 revenue growth, saying the outlook, thanks to Iraq, so far is too uncertain. "I am prepared to give 1,000 Euros of my personal money to anyone who can tell me what 2003 will be like," Mr. Levy said. But he vowed Publicis would aim for a 15% operating margin-the ratio of revenues to earnings before interest and taxes-during the second half.

focus on retention

In the meantime, Publicis shops plan to focus on client retention while trying to build up new business. So far, first-quarter new business gains are healthy, including the $150 million Gateway Corp. account won by Burnett. Publicis and Saatchi networks "have nothing to be ashamed of," he said. When first-quarter new business totals are published in the next few weeks "a number of you will be surprised by the performance of the new Publicis Groupe in the new quarter," he said.

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