Publicis scales back year sales growth target after weak Q3

PARIS, Oct (HKSE: 3366-OL.HK - news) 22 (Reuters) - Publicis (Paris: FR0000130577 - news) sales slowed markedly in the third quarter, hurt by weakness in the United States where customers delayed or cut marketing projects, forcing it to cut its annual organic growth target to 1 percent from 2.5 percent.

The results are the latest setback for the world's third-biggest advertising agency by sales, which has been lagging competitors like WPP (LSE: WPP.L - news) and Omnicom in terms of growth and fighting to retain key customers like Procter & Gamble amid an unprecedented slew of contract reviews.

Chief Executive Maurice Levy said the unexpected slowdown started in September and affected multiple customers in the United States in the automobile, pharmaceutical, and consumer goods sectors, although he declined to provide specifics.

"It (Other OTC: ITGL - news) 's not just one company or one contract that caused the disappointing quarter - things were simply not as good as they need to be in the United States," said Levy. Latin America was also weak because of Brazil's recession.

Third-quarter sales were 2.33 billion euros, giving an organic growth rate of 0.7 percent, compared with 1.4 percent in the second quarter and 0.9 percent in the first.

Analysts had been expecting organic sales growth of 2.1 percent in the third quarter, according to a company-provided consensus.

The results were weaker than number two Omnicom, which reported third-quarter organic sales growth of 6.1 percent on improved margins, but where the dollar's strength caused a 1.1 percent fall in reported revenues to $3.7 billion.

Interpublic Group also outpaced Publicis on organic sales growth of 7.1 percent and reported sales growth of 1.3 percent on revenue of $1.87 billion.

Asked to explain the lag with peers who are also heavily exposed to the U.S (Other OTC: UBGXF - news) . market, Levy said there were differences in the client portfolios, and that Publicis' higher proportion of digital business meant customers could more easily delay or alter projects.

(Reporting by Leila Abboud; Editing by Andrew Callus)