Shares of Publicis Groupe SA (PUBGY.PK,PGPEF.PK) declined around 3 percent in the morning trade in Paris on Thursday after the French advertising and communications company said it expects growth to slow down in the second quarter after reporting a 13 percent increase in first-quarter revenues. However, it expects stronger and steadier growth in the second half. Chairman & CEO Maurice Lévy noted that the company remains confident about this year despite macroeconomic uncertainties that beg caution.
In a statement, the company noted that it has performed well "thanks to its exposure to the digital economy, its presence in the USA and its expansion in high-growth countries such as Brazil, China or Russia. Despite the difficult economic context, Publicis Groupe has also fared well in Europe, especially in Germany the UK and France."
For its first quarter, revenue grew to 1.45 billion euros from 1.29 billion euros a year ago. Organic growth reached 4.1 percent during the quarter, despite the economic situation remaining hesitant during the early part of the year, the company said.
Publicis Groupe attributed the positive momentum largely to good results in the USA and parts of western Europe, as well as to growth in the BRIC (Brazil, Russia, India and China) and MISSAT (Mexico, Indonesia, Singapore, South Africa and Turkey) countries.
In the mature markets, European revenues increased 4.6 percent and North America climbed 14.6 percent. In the emerging markets, combined revenues of BRIC and MISSAT climbed 31.3 percent and the growth was 11.1 percent in the rest of the world, despite weak performance in Japan, South Korea and Australia.
Digital services, which became the Groupe's foremost activity with 33 percent of its total revenue, continued to perform well, posting growth of 15.6 percent.
When combined, digital activities and the emerging economies accounted for 54.1 percent of total revenues, in line with the medium-term objective of deriving 75 percent of its revenue from these two expanding sectors.
The company added that the trend observed in the advertising market since the end of 2011 has been one of reasonable growth, a trend that was confirmed in the first quarter of 2012.
Publicis Groupe added that it continued to implement its strict cost control program.
Looking ahead, Publicis Groupe confirmed its medium-term objective of deriving 75 percent of its revenue from high-growth businesses and markets. The company stated that will continue to roll-out its two-pronged strategy worldwide, namely high-growth markets and digital activities, which is expected to consistently outperform the market due to the rapid expansion of social media and mobile advertising.
The Groupe's financial situation remains very solid, it said.
In Paris, Publicis Groupe shares are currently trading at 38.94 euros, down 1.17 euros or 2.93 percent.
by RTT Staff Writer
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