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Publicis wants to double China business
December 2, 2010 / 9:33 AM / 7 years ago

Publicis wants to double China business

PARIS (Reuters) - Publicis (PUBP.PA), the world’s third-largest advertising group, wants to double its sales in China and expects to approve an investment plan for the country in the next two to three weeks, its chief executive said.

<p>French advertising group Publicis Chief Executive Maurice Levy speaks during the Reuters Global Media Summit in Paris December 2, 2010. REUTERS/Mal Langsdon</p>

Publicis CEO Maurice Levy also told the Reuters Global Media Summit on Thursday he wanted to increase the dividend payout ratio to 40 percent over time from around 30 percent currently.

“We have not yet a clear plan for this 40 percent payout. We believe this is something which will take time because we want to do it progressively and cautiously,” Levy said.

Publicis shares rose 1.68 percent to 35.69 euros by 1248 GMT, outperforming a 0.4 percent rise in the European media index .SXMP.

Legy said the China expansion plan, which would likely be finalized in the week before Christmas, would include small acquisitions, hiring and education programs. Publicis does not break out the size of its sales in China.

Publicis’s total Asia-Pacific sales grew 7.2 percent to 436 million euros ($575 million) in the third quarter, including 10 percent growth in China, where Publicis is second to bigger rival WPP (WPP.L).

Advertising agencies are pinning much of their expected growth on fast-growing markets such as China, especially as a euro zone debt crisis and weak economic data in the United States cast doubt over prospects in major developed economies.

“We are witnessing an improvement in many areas and many countries, and the real cloud there is in the market today is the issue of sovereign debt, so I do hope that if this is not solved it can be at least contained,” Levy said.

He added that he expected Publicis to grow faster than the expected market rate of 4.6 percent next year, helped by renewed investments from the battered automotive and financial sectors where recovering companies will jostle for visibility.

Levy said competition was intense on many fronts between the large advertising agencies, who are fighting for the best talent as they start hiring again, but said he saw no prospect of consolidation with valuations at current levels.

World number four Interpublic (IPG.N), often considered as ripe for acquisition by one of its bigger rivals, has risen 45 percent in market value this year to $5.2 billion and now trades at 26 times 2010 earnings, according to Reuters data.

“The PE of all these operations are horrendous, so I don’t see based on the multiples which exist today any possible transaction in the short term,” Levy said.

(Reporting by Leila Abboud, Gwenaelle Barzic and Georgina Prodhan; Editing by James Regan and Hans Peters)

$1=.7582 Euro

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