UPDATE 2-Publicis sees continued growth despite credit crisis
(Adds comments by CEO, analyst; share price)
PARIS, July 24 (Reuters) - French advertising group Publicis (PUBP.PA) reported higher than expected sales growth on Thursday and predicted further growth despite an expected fall in marketing spend in some areas, sending its shares up.
Publicis, the world's fourth-biggest advertising and marketing group, said in a statement it made half-year sales of 2.23 billion euros ($3.5 billion), giving an organic growth -- which excludes currency effects, takeovers and divestments -- of 5.4 percent.
Analysts, who closely watch organic revenue growth, had on average expected a rate of 5.2 percent and said the results and outlook were good. Publicis's organic growth rate was 3.1 percent over the whole of 2007.
Shares in Publicis rose as much as 2.6 percent and were up 1.2 percent by 0948 GMT, outperforming a 0.1 percent rise in the DJ Stoxx European media sector index .SXMP.
Publicis increased organic sales in all areas, including the United States, but it expected marketing investments to fall in some areas, citing the automotive and financial sectors, due to the credit crisis and rising commodity and food prices.
Publicis, which makes 42 percent of its sales in North America, joined U.S. rival Omnicom Group Inc (OMC.N), the world's biggest advertising group, in posting higher organic sales.
Earlier this week Omnicom said second-quarter sales grew 4.8 percent organically but added it had seen slower growth in the UK and Spain and it remained cautious about the U.S. economy.
WEAKNESS IN BRITAIN, SPAIN
Publicis's chief executive, Maurice Levy, said he had also seen weakness in the UK and Spain, two European countries hit hard by falling housing prices, but Levy had not yet seen a slowing in advertising spending in the rest of Europe or the U.S. consumer segment.
Publicis's results come amid concerns that the advertising industry would be severely hurt by a slowdown in spending by companies due to the U.S. economic downturn.
"If we are in a more or less stable situation we should be able to grow sales more than we did last year on average and in the same trend as we have done in the first half," Levy told reporters about Publicis' expected 2008 organic sales growth.
Publicis also aimed to reach an operating margin similar to the one last year, which was 16.7 percent, Levy said.
"If there was a market slump we think we could better resist it than our competitors and than Publicis has done in the past," Levy said, citing bigger operations in digital advertising and emerging markets, where Publicis has been making acquisitions in the past year.
For 2009 Publicis sees signs of slowing growth in a post-Olympic year but early trends are "encouraging" and the company said it aimed to "consolidate" its operating margin at the current level.
A weaker dollar against the euro weighed on Publicis' net profit, which was down 3 percent to 192 million euros compared with last year and in line with analysts estimates.
"The group confirmed the relevance of its strategy, having benefited from growth in advertising expenditure in the digital segment and in emerging countries. It continues to trade at attractive valuation multiples," CM-CIC Securities analyst Emmanuel Chevalier said in a note.
Publicis shares trade at 9.3 times expected 2008 earnings per share, which compares with 12.6 times for Omnicom and 10.6 for French rival Havas (EURC.PA), which will report sales on Friday.
Shares in the world's second and third-biggest advertising groups, WPP Group (WPP.L) and Interpublic Group of Companies (IPG.N), trade at 9.4 and 18.3 times expected 2008 earnings respectively. (Editing by Greg Mahlich)
