February 11, 2009 / 6:09 AM / 9 years ago

UPDATE 4-Publicis vows fight for advertising budgets

* Net profit down 1.1 percent at 447 mln euros in 2008

* CEO sees global ad market down 2-3 percent in 2009

* Plans 2008 dividend of 0.6 euro, unchanged from 2007

* Shares rise 3 pct

(Adds organic sales comment, updates share reaction)

By Sophie Taylor

PARIS, Feb 11 (Reuters) - French advertising firm Publicis Groupe (PUBP.PA) posted a 1.1 percent drop in 2008 net profit and vowed to fight for advertising spending torpedoed by a slide in consumer confidence.

Chief Executive Maurice Levy said on Wednesday the crisis made market visibility difficult but he was committed to winning market share this year and industry-best margins in 2009.

“It’s going to be a very difficult year, and we will fight on the corner of every street for business. We will fight to control costs and we will be constantly on the look-out,” he told reporters.

Publicis expects a significant drop in organic sales growth in the first and second quarters of this year, Levy told a conference call.

Acquisitions in fast-growing markets such as India and China -- where the firm has already made several buys -- and forays into the digital business would help drive growth, said Levy.

He said the global advertising market would fall by 2-3 percent in 2009, a more pessimistic view than most analyst predictions.

Shares in Publicis, the world's No. 4 advertising and marketing group which competes against Havas EURC.PA and Omnicom Group Inc (OMC.N), were up 3.42 percent at 19.51 euros by 1123GMT, outperforming a 0.8 percent drop in the pan-European FTSEurofirst 300 index .FTEU3.

“The results are above all expectations and the contrast with Omnicom is striking,” said Christophe Cherblanc, analyst at Societe Generale.

Omnicom Group on Tuesday reported a 14 percent drop in quarterly earnings. [ID:nN10260355]

Publicis’ aim to have the best margins in the industry was “very realistic” given their already high level in 2008 and showed a better execution over the firm’s rivals, Cherblanc added.

Publicis posted 2008 net profit of 447 million euros ($579 million) on Wednesday.

The figure pipped an average forecast by 12 analysts polled by Reuters of a net profit at 444.5 million euros.

OPEN TO ACQUISITIONS

Recent weak retail sales in the United States and Germany have added to evidence of a global recession. British consumer morale hit a record low in January while Japanese data on Wednesday showed consumer confidence mired near record lows.

Publicis said its operating margin was flat at 16.7 percent in 2008 and it would keep its dividend at 0.6 euros a share.

The company, whose clients include Swiss food group Nestle AG NESN.VX, French energy giant Total SA (TOTF.PA) and Gulf carrier Emirates Airline [EMIRA.UL], posted full-year like-for-like revenue growth of 3.8 percent. Full-year revenue rose 0.7 percent to 4.7 billion euros, meeting forecasts.

In the fourth quarter, comparable growth was 1.1 percent, a slowdown on previous quarters and reflecting economic decline, the company said in a statement.

Levy has said the global advertising market will deteriorate further in 2009 and not recover before the second quarter of 2010.

Nevertheless, Publicis remains open to acquisitions in emerging markets and does not rule out targets in mature markets, in particular in new business segments, he said.

Publicis aims to make a quarter of its revenue from fast-growing markets such as China and India by 2010 and another quarter from digital business by the end of next year.

Digital made up 19 percent of total revenue last year, compared with 15 percent in 2007. High-growth countries made up 23 percent of total revenue in 2008, up from 21.3 percent. ($1 = 0.7716 euro) (Editing by Tim Hepher, Marcel Michelson and David Cowell)

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