Publicis Groupe results hit by slow US economy

LONDON - Publicis Groupe has seen "modest" growth in the second quarter of 2007, due to a "particularly...unfavourable" base period, slower economic growth in the US, and the cancellation of several healthcare campaigns.

The group posted 1.6% organic growth for the first half of the year in its latest quarterly report, with second-quarter growth down to 0.2% from 3% in the previous quarter.

It expects full-year growth to be between 4% and 5% lower than previously expected.

Year-on-year revenue in the first half grew by 6% to euros2.25m, while net income inched up by 1% to euros198m.

Presenting the results on Tuesday, chairman and chief executive Maurice Levy, pictured, said a number of factors had dampened first-half organic growth: an unfavourable base comparison due to a high billing level in the first half in 2006, and problems specific to the pharmaceutical sector which led to the cancellation of substantial campaigns.

Levy said: "None of these problems encountered during the first half-year are of a structural nature. They were the result of issues that for the most part have already been resolved."

Levy also pointed to improvement in all other indicators, including new business, margin, free cash flow and level of debt, as well as investment in the digital sector.

He said the second half of the year was already looking strong, with $3.5bn in new accounts awarded since the beginning of the year.

Commenting on its principal market, Publicis Groupe said first-half organic growth in Europe was "negligible", with France, the Netherlands and the UK showing the same limited growth in the second as in the first quarter.

Growth in the US was "markedly weak" and "weak" in Latin America, in contrast to strong growth in China, Africa and the Middle East.

Publicis Groupe, the French advertising company, owns Leo Burnett, Starcom and Saatchi & Saatchi.

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