Advertiser Publicis’ shares slide after sales miss forecasts
Group says environment for clients still 'challenging'
PARIS: Advertising agency Publicis, facing fierce new competition from the growth in online advertising, posted third-quarter sales on Thursday that missed market forecasts and sent its shares lower.
The world’s third-largest advertising group behind WPP and Omnicom said sales had risen 1.2 percent on a like-forlike basis to €2.264 billion ($2.67 billion).
However, this came in below an average forecast for €2.34 billion from analysts polled by Reuters.
Publicis’s shares slid 6.6 percent to €58.09 in mid-session trading, making the stock the worst performer on France’s benchmark CAC-40 index.
Shares in industry leader WPP also fell 2.7 percent.
Publicis’s new boss Arthur Sadoun said the market for advertisers remained challenging — something that was further highlighted on Thursday when Sky said it was launching a review of its advertising budget.
Publicis’s relatively weak performance followed a sales warning from WPP in August that had sent WPP shares down by more than 10 percent.
Sadoun took a swipe at WPP for blaming cutbacks in advertising spending by consumer goods giants for the woes of advertising companies.
“I think it’s a dangerous mistake to blame the problems of our industry on challenges that our customers could be facing,” said Sadoun.
Publicis and its peers are under pressure to overcome changes in consumer behavior, with Internet titans such as Google and Facebook having transformed the industry by using data to better target advertising.
Sadoun has followed on from his predecessor, company veteran Maurice Levy, in focusing on more digital consulting to compete with consultancies such as Accenture and IBM.
Digital consultancy entails advising companies on how their websites and mobile platforms look, and on their Internet advertising and marketing strategies.
Rival Omnicom reported a drop in third-quarter revenue this week, due in part to competition from the likes of Accenture and IBM, although its numbers topped estimates.
Sadoun has not endorsed Levy’s previous financial performance targets for 2018 which included an operating profit margin of 17.3 to 19.3 percent. Publicis’s first-half operating margin stood at 13.2 percent.
Publicis has already been reorganized over the last 18 months under a project dubbed “The Power of One,” aimed at fostering greater cooperation between its myriad agencies.
“Publicis’s below-forecast organic revenue growth may check the more positive sentiment on the agencies that had been seen post-Omnicom’s Q3 results, which beat expectations in North America,” analysts at brokerage Liberum wrote in a note.