* 2011 organic growth 5.7 pct, op margin 16 pct
* Dividend stable at 0.70 euros per share
* 2011 revenue 5.82 bln eur vs consensus 5.77 bln
* CEO says aims for stable op margin in 2012
By Leila Abboud
PARIS, Feb 9 Advertising agency Publicis
is confident about its prospects for 2012 despite the
volatility of the global economy, which is causing some clients
to delay spending decisions and others such as banks and car
makers to reduce marketing efforts.
Chief Executive Maurice Levy said the group would aim to
grow faster than the overall ad market this year, while keeping
its operating margin stable.
"The year will be marked by uncertainty," he acknowledged,
adding that Publicis' reach in emerging markets and digital
advertising and its focus on cost controls would allow it to
overcome the challenges.
Levy said the expected ad spending boost from a trio of
upcoming events - the summer Olympics, European football
championships and the U.S. presidential election - was likely to
be muted by concerns elsewhere about global growth.
"Given that it is a so-called quadrennial year with all
these events, the advertising sector should be having a really
big year," he said. "Instead we'll probably end up with a good
Publicis, which is the world's biggest ad group by revenue
and competes with WPP and Omnicom, posted
full-year results ahead of expectations on Thursday with organic
growth of 5.7 percent.
Annual revenue reached 5.82 billion euros ($7.71 billion),
ahead of the average estimate of 5.77 billion according to
Thomson Reuters I/B/E/S.
Publicis slightly improved its 2011 operating margin to 16.0
percent from 15.8 percent a year earlier, largely by increasing
revenue and limiting restructuring costs.
As the first major ad group to publish results, Publicis'
figures and Levy's comments on what lies ahead for the world
economy are likely to be scrutinised by investors.
With ad agency performance largely linked to the economic
cycle, investors have been wary of the sector recently for fear
that Europe's sovereign debt crisis and persistent unemployment
in the United States and elsewhere would slow consumer spending.
The International Monetary Fund chopped its estimate for
2012 global growth to 3.3 percent from 4 percent just three
months ago and warned it could drop as low as 1.3 percent if
Europe lets the crisis fester for much longer.
But some advertising executives and market forecasters
remain remarkably optimistic about 2012's growth prospects.
Havas CEO David Jones recently told Reuters that corporate
executives he met with were more upbeat than gloomy economic
forecasters and that the year could turn out better than many
For his part, Levy said January ad sales were good and that
it was too soon to tell how demand would shape up for the rest
of the year. He said he expected banks and auto makers to face
weakness, while technology and telecoms companies spend heavily
to position themselves in very competitive markets.
Market research group Zenith Optimedia, which is a unit of
Publicis, has forecast 4.7 percent growth for the ad sector this
year, up from 3.5 percent in 2011.
For Levy, the ongoing uncertainty meant Publicis must be
prudent and agile.
For example, the group has frozen hiring again and is trying
to keep a tight rein on personnel expenses, which tend to be
high in an industry where top talent often defects to rivals.
While targeted acquisitions in digital and online ads were
still on the table, Levy did not expect to splash out on
mega-deals this year.
"I don't think we'll see consolidation among the top ad
agencies this year; there is no reason for it," he said.
Such prudence, Levy says, will help Publicis keep its
operating margin stable this year, after improving it in recent
"With the level of margins we've now attained, our goal will
be to consolidate those gains, rather than expect further
increases because we still want to invest in talent and
technology," he added.
Publicis also chose not to increase its dividend for 2011
despite generating a higher net profit and free cash flow,
keeping it at 0.70 euros per share.
"We want to be careful," said Levy.
He added that he expected the group's biggest shareholder,
Dentsu, to decide in the first half of the year whether
it wanted to sell its stake of around 11 percent.
Dentsu has a window starting in July 2012 during which it
can sell some or all of the stake it owns or hold onto it.
Publicis has said that it would buy back and cancel the
Japanese company's shares, which are worth about 850 million
euros at current valuations.
Publicis shares fell about 10 percent in 2011, less than the
media index overall, but its shares have recovered to rise 12
percent since the beginning of this year amid a broader market
Publicis shares closed at 39.78 euros per share on
($1 = 0.7545 euros)
(Additional reporting by Gwenaelle Barzic; Editing by James