October 18, 2018 / 7:17 AM / in a month

Publicis regains some footing with third-quarter sales

PARIS (Reuters) - France’s Publicis regained some footing in the third-quarter, lifting its shares, as the addition of new global clients pulled up sales in what remains a challenging market for traditional advertising groups.

The world’s third-biggest advertising company said net revenue rose 1.3 percent to about 2.20 billion euros ($2.53 billion), excluding the impact of acquisitions and foreign exchange, in line with market expectations.

The performance represents a slight rebound from the unexpected drop in net revenue Publicis faced in the previous quarter because of poor results by the group’s U.S. healthcare communications business.

Publicis shares climbed 4.4 percent in early session trading, helping lift the shares of its British rival WPP which also rose 1.4 percent.

The bulk of the revenue loss was at the time blamed on Publicis Health Solutions (PHS), a subsidiary that provides sales resources to clients and which Publicis is now seeking to sell.

“We have received several expressions of interest,” Chief Executive Officer Arthur Sadoun said, referring to the business, whose yearly revenue amounts to 250 million euros.

Excluding PHS, Publicis’s underlying sales would have gained 2.2 percent, Publicis said, thanks to gaining global clients in the first quarter such as Daimler’s Mercedes-Benz brand, Carrefour and Marriott International.

These additions show that the group, which has struggled to compete against dominant technology groups like Alphabet’s Google and Facebook online, is on the right track in adapting to a global market with more cautious clients and newcomers such as consultants Accenture, Sadoun said.

NEW STRATEGY

Under a plan Sadoun presented in March, the group is targeting underlying sales growth of 4.0 percent in 2020 by focusing on its digital arm Publicis.Sapient and fostering greater collaboration between its many agencies worldwide.

That strategy and the internal expertise of thousands developers in India within the digital division, is aimed at offering technological tools to clients on top of creative campaigns and advertising space purchasing.

This was critical in winning the global media budget of GlaxoSmithKline(GSK) recently, Sadoun said. The new budget will in turn add revenue from the first quarter of 2019, he added.

Publicis affirmed that it can achieve higher year-over-year growth and operating margin in 2018. It added that it planned an annual growth of its headline diluted earnings per share between 5 and 10 percent.

($1 = 0.8695 euros)

Reporting by Mathieu Rosemain and Gwenaelle Barzic

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