By Leo Marchandon
(Reuters) – French advertising group Publicis upgraded its organic growth guidance on Thursday after beating expectations for the second quarter, boosted by double digit growth in its Epsilon and Media branches.
Publicis’ recent strong performance runs counter to a general slowdown in the advertising industry, seen as a bellwether for broader economic health.
The world’s largest advertising group by market value now expects its organic revenue to grow between 5% and 6% compared to its previous guidance of +4% and +5%.
Publicis expects to reach the higher end of its guidance if clients end their “wait and see” attitude and increase spending in digital transformation, allowing its IT consulting unit, Sapient, to bounce back.
“There are many (clients) today who are waiting because of macroeconomic uncertainties and who are reluctant to spend capex to put this in place,” Chief Executive Arthur Sadoun said in a call with journalists, adding the unit’s performance in the United States in the past six months was a good sign.
The parent company behind agencies such as Leo Burnett and Saatchi & Saatchi reported a net revenue of 3.46 billion euros ($3.78 billion) in the second quarter, with an organic growth of 5.4%, above consensus of 4.8% and the 4-5% it forecast in April.
Publicis’ Epsilon unit, which provides targeted advertising capacity, continued driving the group’s performance thanks to individualised consumer profiling, Sadoun said, adding the group now has 250 million individualised profiles in the U.S.
Its performance in the Asia-Pacific region outpaced that in North America and Europe, achieving 7.7% organic growth, including 10.5% in China alone despite an “extremely complicated” macroeconomic context.
In the first half ending June 30, the group’s core profit (Ebitda) rose 4.9% to 1.40 billion euros.
Rival Omnicom’s results for the second-quarter also beat estimates amid ramp up of ad spending in the lead-up to the U.S. presidential election and events such as the Paris Olympics.
($1 = 0.9151 euros)
(Reporting by Leo Marchandon and Dagmarah Mackos; Editing by Sandra Maler)
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