UPDATE 1-Publicis sees brighter Q3 after weak Q2

Fri Jul 20, 2012 1:43am EDT

* Q2 sales reach 1.63 bln eur, organic growth 1.6 pct

* Compares with 4.1 pct organic growth in Q1

* CEO rules out counter-offer for UK's Aegis

By Gwénaëlle Barzic

PARIS, July 20 (Reuters) - Advertising agency Publicis predicted a rebound in its business in the third quarter after posting weak growth in the second, dragged down by Europe's economic woes and the loss of an important contract with General Motors.

The world's third-largest ad group by revenue, which competes with WPP and Omnicom, posted second-quarter revenue of 1.63 billion euros ($2.00 billion).

Organic growth was 1.6 percent, a marked slowdown from the 4.1 percent seen in the first quarter.

"We had predicted back in February that the second quarter would be slower, and that is what happened," Chief Executive Maurice Levy said in a briefing with journalists.

"We should have a third quarter that now seems like it will be better than the first quarter."

Levy also confirmed Publicis' annual targets to grow revenue faster than the overall advertising market and achieve roughly stable margins versus last year's 16 percent.

Its profit margin stood at 13.5 percent for the first half of the year.

Publicis had expected demand to be lower in the second quarter as some major advertisers delayed spending to coincide with the Olympic Games in London and the U.S. elections.

Its competitors predicted a second quarter in line with the first. Omnicom on Tuesday posted higher revenue and profit, and organic growth of 5.1 percent in the second quarter on the same level as the first.

Held back by Europe's ongoing debt crisis, global ad spending is set to grow by 4.3 percent to $502 billion this year, a slightly slower rate than previously predicted, according to Publicis-owned market research group ZenithOptimedia.

Ad spending generally tracks economic growth, so hiccups in world markets tend to hit advertising agencies.

The sector is also in a period of consolidation, with Publicis and WPP inking acquisitions in recent months to expand in emerging markets and beef up their digital ad offerings.

Japanese ad giant Dentsu has made an offer to buy marketing group Aegis for 3.2 billion pounds ($5 billion) as it seeks to expand outside its home market.

Asked if Publicis would consider making a counter-offer for Aegis, Levy ruled out such a move.

"We have certainly looked at Aegis a few times. Putting $5 billion on the table to buy Aegis seems out of proportion with our needs," he said.

Levy also confirmed that Publicis intended to increase its dividend payout ratio this year as promised at the last shareholder meeting.

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