October 19, 2017 / 5:52 AM / 2 years ago

Publicis advertises stronger growth in H2 after further pick-up in U.S.

* Q3 sales rise 1.2 pct on organic basis to E2.26 bln

* Analysts were expecting revenue of E2.34 bln

* Says environment for clients still “challenging”

* 2018 targets expected next March

By Gwénaëlle Barzic

PARIS, Oct 19 (Reuters) - Advertising group Publicis expressed confidence for the second half of 2017 despite what it called a “challenging environment” for clients, stating that doing more digital consultancy work would help deliver solid results.

Publicis, the world’s third-largest advertising group which competes with WPP and Omnicom, reported a second sequential rise in organic growth for the third quarter, partly helped by a further pick-up in North America.

Sales in the quarter ended September were up 1.2 percent on an organic basis to 2.264 billion euros ($2.67 billion) following a 0.8 percent rise in the second quarter.

Analysts polled by Reuters had on average been expecting total revenue of 2.34 billion euros.

Sales in North America, the group’s biggest market, were up 3 percent to 1.24 billion euros.

Publicis, whose headquarters lie on Paris’ Champs Elysees, has gone through an internal reorganisation over the last 18 months dubbed “The Power of One”, aimed at fostering greater cooperation between its myriad agencies. The plan has been backed by newly-appointed chief executive Arthur Sadoun.

Yet Publicis still has to prove that going into the digital transformation business is the right choice, after it took a big writedown on its digital arm Publicis.Sapient that is hampering its capacity to increase dividends.

“We know we are only in the middle of our transformation journey,” Sadoun told journalists.

“What we are doing is difficult, the environment is challenging, but we believe it will result in a sustained organic growth path at Publicis,” he added.

He said the company would hold an investor day on March 20 next year, which should provide guidance over its 2018 outlook.

Publicis, like many of its peers, is under pressure to overcome changes in consumer behaviour. It also has to adapt to changes imposed by Internet heavyweights such as Google and Facebook which have transformed the sector by using data to better target advertising.

Sadoun, 46, replaced company veteran Maurice Levy in June. He approved the strategy initiated by his predecessor to position the group closer to digital consulting, making it compete increasingly with companies like Accenture.

However, Sadoun has not endorsed previous targets for 2018 which included an operating margin of 17.3 to 19.3 percent. Publicis’ first-half operating margin stood at 13.2 percent.

Omnicom reported lower third quarter revenue this week, hurt partly by competition from Accenture and IBM, although its numbers topped analysts estimates.

$1 = 0.8473 euros Writing by Matthias Blamont; Editing by Sudip Kar-Gupta

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