Publicis reports profit rise on European advertising

French advertising group Publicis reported on Thursday an 8.5-percent rise in net profit for the first half, and said it expected to outperform its markets this year. Company president Maurice Levy said that "2011 should confirm our target for growth outstripping the market and an improved operating margin." Levy said that the group was building two strategic pillars, digital activity and countries showing strong growth. This was "bearing fruit" and the outlook was promising, he said adding that expansion in China remained a top priority. At CM-CIC Securities, stock analyst Emmanuel Chevalier said the firm had done "better on revenue" but had "disappointed on profitability." The figures showed "impressive"growth which showed that the business had competitive advantages and that its strategic choices were right, he added. Shares in the group fell by 2.44 percent to 36.92 euros in mid-day trading. The overall market was showing a fall of 0.21 percent. Levy said that the group's income streams were "not very exposed" to the eurozone sovereign debt crisis and that the firm had not encountered "major worries" in the countries most affected by it. A slowdown in the United States, where sales had fallen by 5.9 percent to 639 million euros and where internal growth was 5.3 percent, was being made good by growth in developing countries, he added. Monitoring agency ZenithOptimedia has estimated that spending worldwide on advertising this year is likely to return to the record high level of 2008. Publicis said that in the first six months of the year, net profit amounted to 231 million euros ($329.5 million) and that sales had risen by 6.3 percent to 2.7 billion euros. In the second quarter, sales rose by 2.7 percent to 1.4 billion euros. The operating margin in the first quarter fell by 13.5 percent, compared with 14.5 percent in the first quarter, pulled down by increased staff costs, Levy said. Growth of internally driven sales, a key measure in the sector, was 7.6 percent from the figure for the second quarter of last year, and in the first half it was 7.1 percent. This performance was better than had been expected and was partly driven by activity in Europe where internal growth was 11.5 percent to 487 million euros in the second quarter, Levy said. Sales growth in Latin America was 25.4 percent in the second quarter, taking total sales from 71 million to 89 million euros. Sales in Africa and the Middle East had grown by 11.4 percent to 39 million euros. Sales in the Asia-Pacific region had risen by 3.2 percent to 159 million euros. Levy said that in the past year the group had recruited 3,500 people. Pay had been increased after a two-year freeze. Publicis has spent slightly more than 500 million euros to expand the company externally in the first seven months of the year. It is also looking at takeovers and is in talks in China where it wants to double in size to make the country its third-biggest market within three years, ahead of Britain and Germany. Digital and multimedia advertising constituted 29.0 percent of company sales, up from 28.1 percent a year ago.