Advertising agency Publicis posts strong Q4, aims for recovery

By Leila Abboud and Gwénaëlle Barzic

PARIS, Feb 12 (Reuters) - France's Publicis (Paris: FR0000130577 - news) promised business would pick up in the second half of this year as the advertising agency recovered from a tough 2014 marred by a failed mega-merger with U.S. peer Omnicom.

It also posted fourth-quarter organic sales growth of 3.2 percent on revenue of 2.15 billion euro, helped by a rebound in emerging markets like Brazil and China, as well as better demand from advertisers across all sectors from cars to consumer goods.

The strong finish brought annual organic sales growth to 2 percent on revenue of 7.26 billion euro, slightly ahead of analyst expectations.

Publicis Chief Executive Maurice Levy is trying to win back investor support after the agency's growth lagged behind competitors in recent quarters because of the fallout from the failed Omnicom deal. The shares have risen nearly 13 percent this year to close at 67.05 euro on Wednesday, after falling 10 percent last year.

Key to the promised recovery is building on the $3.7 billion acquisition of digital ad specialist Sapient (NasdaqGS: SAPE - news) , which was completed last week.

Levy said Publicis was already hard at work on the integration and would soon benefit from the added strength of Sapient in on-line ads and consulting.

"Around the end of this year, we will begin out-performing our rivals again," he said at a press briefing.

Levy added that he expected Publicis to grow faster than the 3 to 3.5 percent sales growth forecasted for the advertising agencies globally.

Publicis, which is the third-largest global advertising holding company after WPP (LSE: WPP.L - news) and Omnicom, plans to pay a dividend of 1.20 euro per share, up from 1.10 euro in 2013.

Its 2014 operating profit fell 4.8 percent to 1.07 billion euro, while profit slipped 9.1 percent to 720 million euros because of a 72 million euro impairment charge related to underperformance at agencies MSL and BBH.

Asked about the prospects for the global economy, Levy sounded upbeat despite the brewing standoff between Greece and the European Union over its debt and the war in the Ukraine.

"At the end of last year we did not see major advertisers cutting back their marketing budgets so I think the results of major multinationals during this reporting season will be strong," he said.

"Business leaders in Europe are relatively calm about Greece and believe that a solution will be found. They are more focused on the tentative signs of a growth recovery in the region."

But the real motor of global economic activity this year will remain the United States, the veteran CEO said.

"The U.S. is setting the rhythm with solid growth rates and lower unemployment, and this should benefit us since about half our business is there."

Omnicom on Tuesday nevertheless issued a cautious forecast for organic growth this year of about 3.5 percent, slowing from 5.7 percent last year, saying the stronger dollar would dent profitability.

WPP is set to publish results on March 9, and smaller agency Havas (LSE: 0MGT.L - news) publishes annual sales on Thursday.

(Editing by Andrew Callus)