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Publicis Groupe shares drop by 6% Publicis Groupe shares drop by 6%
(6 months later)
Shares in Publicis Groupe, owner of ad agency networks including Saatchi & Saatchi, dropped more than 6% on Monday after a surprise fall in its European operation led to first-quarter revenue growth of just 1.3%.Shares in Publicis Groupe, owner of ad agency networks including Saatchi & Saatchi, dropped more than 6% on Monday after a surprise fall in its European operation led to first-quarter revenue growth of just 1.3%.
The world's third largest marketing services group surprised investors by reporting organic revenue growth of just 1.3% to €1.56bn (£1.3bn) in the first quarter, driven by a 6.5% year-on-year fall in revenue at its European operation.The world's third largest marketing services group surprised investors by reporting organic revenue growth of just 1.3% to €1.56bn (£1.3bn) in the first quarter, driven by a 6.5% year-on-year fall in revenue at its European operation.
Shares in Sir Martin Sorrell's WPP, the world's largest marketing services group that is listed on the London stock exchange, also fell by more than 4% on Monday off the back of Publicis's announcement as investors worried it too might have had a tougher-than-expected first quarter when it reports on 26 April.Shares in Sir Martin Sorrell's WPP, the world's largest marketing services group that is listed on the London stock exchange, also fell by more than 4% on Monday off the back of Publicis's announcement as investors worried it too might have had a tougher-than-expected first quarter when it reports on 26 April.
Revenue falls of more than 13% in Spain and Italy, 11% in France and more than 6% in the UK hammered Publicis Groupe's global performance, which saw North America grow by 4.4% and fast-growing markets such as Brazil, China, India and Mexico expand by a healthy 5.5%Revenue falls of more than 13% in Spain and Italy, 11% in France and more than 6% in the UK hammered Publicis Groupe's global performance, which saw North America grow by 4.4% and fast-growing markets such as Brazil, China, India and Mexico expand by a healthy 5.5%
Maurice Levy, the chairman and chief executive of Publicis Groupe, attempted to put a shine on the weak performance claiming it was a "satisfactory" first quarter with growth "above internal objectives". He said that at least part of the reason was because the first quarter in 2012 showed strong growth.Maurice Levy, the chairman and chief executive of Publicis Groupe, attempted to put a shine on the weak performance claiming it was a "satisfactory" first quarter with growth "above internal objectives". He said that at least part of the reason was because the first quarter in 2012 showed strong growth.
Nevertheless, analysts had been expecting Publicis Groupe to report revenue growth at more than double the 1.3% rate, with consensus at 2.9%.Nevertheless, analysts had been expecting Publicis Groupe to report revenue growth at more than double the 1.3% rate, with consensus at 2.9%.
Tamsin Garrity, an analyst at UBS, said that it was a disappointing miss. "We had expected the [European] region to report a weak number, but not as weak as -6.5%," she said, in a note to investors.Tamsin Garrity, an analyst at UBS, said that it was a disappointing miss. "We had expected the [European] region to report a weak number, but not as weak as -6.5%," she said, in a note to investors.
Publicis Groupe, which experienced a drop in share value of more than 6% after announcing the trading update on Monday afternoon, said that it expects full-year revenue growth to fall between 3.2% and 3.6%.Publicis Groupe, which experienced a drop in share value of more than 6% after announcing the trading update on Monday afternoon, said that it expects full-year revenue growth to fall between 3.2% and 3.6%.
Garrity, who said the consensus revenue growth for WPP in the first quarter was 2.5%, also said UBS "do not expect weakness like Publicis". "In our view, the sharp decline in WPP share price is overdone," she said.Garrity, who said the consensus revenue growth for WPP in the first quarter was 2.5%, also said UBS "do not expect weakness like Publicis". "In our view, the sharp decline in WPP share price is overdone," she said.
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