April 19, 2018 / 5:32 AM / a month ago

Publicis beats Q1 growth expectations on North American rebound

* Posts organic sales growth of 1.6 pct

* Confirms full-year targets

* Says market environment remains difficult

By Mathieu Rosemain

PARIS, April 19 (Reuters) - France’s Publicis on Thursday posted better-than-expected growth in underlying sales in the first quarter, driven by the rebound of it North American activities.

The world’s third-biggest advertising group said net revenue amounted to 2.08 billion euros ($2.57 billion) over the period, reflecting organic growth, or change excluding the impact of acquisitions and foreign exchange, of 1.6 percent.

This beat a Reuters poll forecast of growth of 0.94 percent and Chief Executive Arthur Sadoun said it bolstered his confidence in Publicis’ strategic plan. The ad industry has been hit by shockwaves such as the sudden exit of the boss of bigger rival WPP last weekend.

“The challenge for us it to continue to deliver financially while accelerating our transformation,” Sadoun said in a briefing with reporters.

“We remain extremely cautious because the market environment remains very difficult,” he added.

The rise of Internet giants Facebook and Alphabet’s Google, improved connectivity and the proliferation of smartphones have profoundly changed consumers’ habits worldwide, spurring large advertisers to look for better ways to reach their end-customers at a cheaper cost.

Consultancy firms like Accenture and Deloitte are also seeking a slice of the global advertising cake, which now includes the field of digital transformation or the setting up of online platforms to better interact with customers, Sadoun said.

CEO SUCCESSION

In this context, Publicis is moving away from the holding model that made its success and that of its competitors WPP, Omnicom and Interpublic Group.

The group is betting on its digital arm Publicis.Sapient, which employs thousands of developers in India, to offer technological tools to clients on top of creative campaigns and advertising space purchasing.

Despite having taken a writedown on the Sapient acquisition in 2016, Publicis said it was instrumental in gaining of new global clients in the first quarter such as Daimler’s Mercedez-Benz brand, Carrefour and Marriott International.

These additions will drive higher growth in 2018 than in 2017, it said, confirming full-year targets for stronger year-over-year growth and higher margins. The goal is also to differentiate its offer from competitors like WPP.

Asked about the resignation of Martin Sorrell, who founded and led WPP for 33 years, Sadoun declined to comment. But he implied a comparison by noting that Publicis had a smooth executive transition when he replaced Maurice Levy less than a year ago. ($1 = 0.8079 euros) (Editing by Cynthia Osterman)

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