U.S. buoys revenue: Publicis, Aegis '03 results strong

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European ad companies Publicis Groupe and Aegis Group posted strong results for 2003 and anticipated a strong 2004, thanks in large part to the contribution of the U.S. market.

Publicis reported a modest increase in net income and a sharp increase in revenue in 2003, which company management credited to the successful integration of Bcom3 Group after its 2002 acquisition. Publicis is the parent of Leo Burnett Worldwide, Saatchi & Saatchi Worldwide and Zenith Optimedia.

Publicis posted net income of $188.4 million, up 2% from last year, on revenue of $4.85 billion, up 30%. Revenue grew 2% for the year on an organic basis, after factoring out acquisitions and the effects of currency fluctuations. Organic revenue growth also showed an improvement during the year, from a drop of 1.2% in the first quarter to a gain of 5.2% in the fourth.

Across the English Channel, Aegis reported 2003 net income of $37.5 million, up 61.1% on revenue of $1.15 billion, a 9.6% increase from 2002, or 4.7% on an organic basis. Executives at Aegis-parent of media agencies Carat and Vizeum and market researcher Synovate-said the record results were helped by solid spending on media in the U.S. and Asia-Pacific markets, as well as improvement in European markets.

fatter books

"The order books are somewhat fatter this year than they were at the beginning of 2003," said CEO Douglas Flynn. In a conference call with analysts, he noted that Aegis' own spending forecasts for 2004 were revised up by one percentage point to 5.3% since December, given unexpected strength in media spending among marketers that have begun to focus on beefing those budgets.

However, Mr. Flynn noted that after the generous media spending spurred by the Olympics and the U.S. presidential election in 2004 there could be a letdown in 2005. Growth could slow in 2005, due to the expected increase in interest rates and the "surprising coincidence" of tighter U.S. fiscal policy after the elections, he said. Mr. Flynn's remarks echoed a similar forecast from WPP Group Chief Executive Martin Sorrell last month.

Fast Facts

Publicis Groupe (Nasdaq-PUB)

2003 revenue: $4.85 billion, up 30%.

2003 net income: $188.4 million, up 2%

Aegis Group PLC (LSE-AGS.L)

2003 revenue: $1.15 billion, up 9.6%

2003 net income: $37.5 million, up 61.1%

Source: Company reports. Percent change is vs. last year and not adjusted for currency.

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