Publicis Groupe Net Income Rises as Digital and Emerging Markets Grow

The Tip Desk · June 30, 2011 · 2 min read

The advertising firm reported a 6.3% increase in first-half revenue to 2,699 million euros despite rising personnel costs.

Publicis Groupe reported a net income attributable to the owners of the parent company of 231 million euros for the first half of 2011, an 8.5% increase from 213 million euros in the prior-year period. Consolidated revenue for the six months ended June 30 rose 6.3% to 2,699 million euros, compared to 2,538 million euros in the first half of 2010.

Organic growth for the period was 7.1%. This trajectory accelerated in the second quarter, with organic growth reaching 7.6% compared to 6.5% in the first quarter. The company attributed this performance to a normalization of advertising investment following the 2009 crisis, specifically within media activities and the Publicis Healthcare Communications Group.

Regional growth was varied. Europe showed a 11.2% organic increase, led by France at 11.9% and Germany at over 10%. North America recorded 6.7% organic growth for the half-year, though the company noted a slight slowdown in the second quarter. Latin America saw the strongest organic growth at 24.6%, driven by several countries including Brazil, which grew 7.3%. Asia-Pacific organic growth was 7.3%, supported by the Greater China region at 9.2%.

Digital activities now represent 29.0% of total revenue, up from 27.7% in the first half of 2010. The company said this growth was supported by acquisitions made in late 2010 and early 2011, including Chemistry Digital and Kitcatt Nohr.

Profitability faced pressure from labor costs. The operating margin for the first half was 364 million euros, a 1.4% decrease from 369 million euros in the first half of 2010. The operating margin rate fell to 13.5% from 14.5%. Personnel costs rose 7.9% to 1,740 million euros. The company said these costs increased due to a resumption of hiring and salary adjustments following a two-year freeze.

Net financial debt stood at 210 million euros as of June 30, 2011, a reduction of 408 million euros compared to 618 million euros on June 30, 2010. The company reported a net cash position of 106 million euros at the end of 2010.

On July 5, the company finalized the acquisition of Rosetta in the United States for 575 million US dollars in cash. Additionally, on July 13, the company signed a new five-year multi-currency syndicated credit facility of 1.2 billion euros to replace a 2004 facility.

Publicis Groupe confirmed its objective to achieve growth higher than that of the advertising market for the full year 2011. The company said it intends to improve its operating margin in the coming quarters.