Investors in Publicis are looking for good news, and Maurice Lévy, chairman and chief executive, thinks he can deliver it.
Last week, the world’s third-largest marketing services group unveiled year-on-year growth of 1.3 per cent for the first quarter – half the rate the market expected – raising fears of a deeper slump in the global advertising market.
But Mr Lévy remains upbeat, insisting that Publicis will deliver “probably on the upper side” of a 3.2 to 3.6 per cent range for annual revenue growth this year, spurred by digital services and emerging markets.
On Tuesday he will update investors on the company’s strategy, to try to reassure them not just that growth is on track, but that cost savings to improve profit margins are also set to deliver.
He will describe the “curve” in margin improvement over the next five years, with the objective of achieving margins of 18 to 20 per cent at the end of the period. In the group’s full-year results for last year, its profit margin stood at 16.1 per cent for the year – a rise of 0.1 of a percentage point from a year earlier.
Significant challenges persist, however. Europe remains in the doldrums, with Mr Lévy predicting that Publicis revenues from the region will decline 4-5 per cent this year.
In the first quarter of the year, the advertising markets in Spain, France and Italy all fell by double digits, with media spending in Spain having declined to “levels of 1993”, according to Mr Lévy.
He said the Spanish advertising market “does not show any sign of recovery” and that neither Italy nor Spain were benefiting from growth in digital advertising, as this segment remains small in both countries.
But he is confident the company can outperform the wider market in these three countries by taking market share.
One engine of digital growth for the company is the planned rollout of Brand Live, a monitoring technology that tracks activity on the web through blogs, social media and other traditional media. Publicis will licence this technology to third parties.
Mr Lévy repeated that he was not interested in acquiring US rival Interpublic Group, despite speculation.
He did say he would be interested in “some of their assets”, though – in particular the digital operations, raising the possibility of a joint bid for the US ad group. Interpublic declined to comment.
Mr Lévy, 71, indicated that the Publicis board, led by Elisabeth Badinter, daughter of the company’s founder and Publicis’ largest shareholder, was not close to a decision on naming his successor.
“They have time and they have decided to do it at their speed,” he said.
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