PARIS (Reuters) - France’s Publicis (PUBP.PA) met 2017 earnings expectations on Thursday, delivering a reassuring message for investors despite challenges facing the world’s third largest advertising group.
The stock was the top performer on France's benchmark CAC-40 index .FCHI, up 5.1 percent at 0945 GMT.
“Publicis is one of the most lowly rated stocks in media and close to its lowest market relative multiples of the last 10 years,” Morgan Stanley analyst Patrick Wellington wrote in a note to clients.
“These results, by being very in line, are relatively reassuring.”
Operating profit of 1.51 billion euros (1.33 billion pounds) was down 0.7 percent on revenue of 9.69 billion euros, off 0.4 percent. It raised its dividend by 8.1 percent to 2 euros per share.
Earlier, Publicis had said it had seen improved underlying sales growth in the second half and expected margins to improve, starting in 2018.
“We’re not pretending that today’s results will satisfy the markets for the next 10 years,” Chief Executive Officer Arthur Sadoun told reporters. “However, we think we’ve done some solid work here.”
That included 2.2 percent growth in fourth-quarter underlying sales buoyed by big accounts such as USAA, Wal-Mart and Hewlett-Packard, Sadoun said, on top of a contract with McDonald’s in partnership with IT consulting firm Capgemini (CAPP.PA).
For 2018, Publicis targets an operating margin rate above 2017’s 15.5 percent and underlying sales growth higher than last’s year’s 0.8 percent.
The operating target is lower than one it set in 2013 of 17.3-19.3 percent seen by 2018. That is because of the costs involved in integrating digital arm Publicis.Sapient, seen as a key driver for growth, as well as a push for increased collaboration among its many agencies.
The big four face a growing threat from consultancies Accenture (ACN.N) and Capgemini while data-driven tech giants such as Facebook (FB.O) and Alphabet’s Google (GOOGL.O) have taken a big slice of the media space online.
Global clients reviewing the effectiveness of their marketing budgets has prompted fierce competition among traditional advertisers.
Publicis will detail its strategy and financial targets during an investor day to be held in London on March 20.
Editing by G Crosse and Jason Neely