Publicis' 2008 Profit Declines, Fights for Ad Budgets

French advertising firm Publicis Groupe posted a 1.1 percent decline in 2008 net profit vowed to "fight" for the advertising business torpedoed by a slide in consumer spending.

Chief Executive Maurice Levy said the crisis had made market visibility difficult, but he was committed to winning market share this year and industry-best margins in 2009.

"It's going to be a very difficult year, and we will fight on the corner of every street for business. We will fight to control costs and we will be constantly on the look out," he told reporters.

Acquisitions in fast-growing markets such as India and China -- where the firm has already made several buys -- and forays into the digital business would help drive growth, said Levy.

He said the global advertising market would fall by 2-3 percent in 2009, a more pessimistic view than most analyst predictions.

Shares in Publicis, the world's No. 4 advertising and marketing group which competes against Havas and Omnicom Group, were up 6.0 percent at 20.00 euros on Wednesday, outperforming a 0.59 percent drop in the pan-European FTSEurofirst 300 index.

"The results are above all expectations and the contrast with Omnicom is striking," said Christophe Cherblanc, analyst at Societe Generale.

Publicis' aim to have the best margins in the industry was "very realistic" given their already high level in 2008 and showed a better execution over the firm's rivals, he added.

Publicis posted 2008 net profit of 447 million euros ($579 million) on Wednesday.

The figure pipped an average forecast by 12 analysts polled by Reuters of a net profit at 444.5 million euros, but came alongside predictions of a tough industry struggle this year as the global financial crisis bites deeper.

Open to Acquisitions

Recent weak retail sales in the United States and Germany have added to evidence of a global recession.

British consumer morale hit a record low in January while fresh Japanese data on Wednesday showed consumer confidence mired near record lows.

Publicis said its operating margin was flat at 16.7 percent in 2008 and it would its dividend at 0.6 euros a share.

Publicis, whose clients include Swiss food group Nestle, French energy giant Total and Gulf carrier Emirates Airline, posted full-year like-for-like revenue growth of 3.8 percent.

Full-year revenue rose 0.7 percent to 4.7 billion euros, meeting forecasts.

In the fourth quarter, comparable growth was 1.1 percent, a slowdown on previous quarters and reflecting economic decline, the company said in a statement.

Levy has said the global advertising market will deteriorate further in 2009 and not recover before the second quarter of 2010.

On Tuesday, Omnicom Group reported a 14 percent drop in quarterly earnings as advertising spending slumped badly at the end of the year and said the current downturn will likely last through the next several quarters at least.

Nevertheless, Publicis remains open to acquisitions in emerging markets and does not rule out targets in mature markets, in particular in new business segments, he said.

Publicis aims to make a quarter of its revenue from fast-growing markets such as China and India by 2010 and another quarter from digital business by the end of next year.

Digital made up 19 percent of total revenue last year, compared to 15 percent in 2007.

High-growth countries made up 23 percent of total revenue in 2008, up from 21.3 percent.

Publicis shares closed at 18.865 euros on Tuesday, having gained 2.6 percent this year while shares in rival Havas have risen 14 percent.

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