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PARIS, April 20 (Reuters) - France's Publicis said on Thursday it suffered less than expected in the first quarter from past losses on big U.S. media accounts, prompting it to see a recovery in the second half of this year.
The world's third-largest advertising group said its underlying sales dropped by 1.2 percent over the first three months of the year to 2.33 billion euros ($2.49 billion), beating a Reuters poll of a drop of 1.9 percent.
Underlying sales dropped by 5 percent in North America alone over the period, dragging down the total and highlighting the tough environment existing for ad companies in the U.S.
"Instability continues to prevail in the international environment, causing companies to proceed with great caution despite strong balance sheets," Publicis' chief executive Maurice Levy said.
Omnicom, the second-largest advertising company, reported slower-than-expected growth in North America on Tuesday, which hit its shares.
The world's number one advertising group, WPP, will report first-quarter net sales on April 27.
Levy said in a briefing with reporters that he expected Publicis' growth rate to be "in line with the market" in the second half of 2017.
The group's underlying sales growth should start to be higher than market average in the second half of next year, he added.
In its statement, the group said it stuck to targets set out under its strategic plan for 2018, including a yearly operating margin of 17.3 to 19.3 percent. Last year, Publicis' operating margin stood at 15.6 percent.
The group is preparing for change at the top when Levy hands over in June to 45-year-old Arthur Sadoun, who oversees its creative agencies including Saatchi & Saatchi and Leo Burnett.
Levy is set to become Publicis' new chairman, replacing Elisabeth Badinter, pending the formal approval by shareholders at the annual general meeting on May 31. ($1 = 0.9335 euros) (Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Tom Heneghan)