Publicis upbeat on 2011 despite quake, Mideast

Ad group Publicis will grow faster than the market this year despite the drag from Japan's earthquake and Middle East unrest, its chief executive said, adding that five per cent growth was a conservative aim.

The world's third-largest ad group, which competes with WPP and Omnicom, posted first-quarter revenue of €1.29 billion ($1.87bn) and an organic growth rate of 6.5 per cent on Thursday, in line with analyst expectations.

Chief Executive Maurice Levy said strong growth in North America and emerging economies like Brazil and Russia would boost growth and largely offset lost revenue in Japan.

"Japan is the world's second-biggest ad market and it will decline significantly, around four per cent, this year because of the quake," said Levy. "But what is happening there and in the Middle East doesn't change our objectives."

He added: "The second quarter looks good and so does the rest of the year."

Levy's upbeat prediction came shortly after Levy's rival at WPP, Martin Sorrell, said his five per cent growth forecast for the year was on the conservative side and US ad giant Omnicom also posted strong first-quarter results.

Asked to respond to Sorrell's comment on the five per cent forecast, Levy said that he believed five per cent growth was a 'conservative' target for Publicis as well.

The advertising sector's optimism comes amid increasing uncertainty over the effect the Japan earthquake and Middle East unrest could have on the global economic outlook, especially if energy and commodity prices continue to rise.

Leading media buyer ZenithOptimedia recently revised downwards its growth prediction for the global ad market from 4.6 per cent to 4.2 per cent, citing Japan, but said the global economic recovery would remain on track.

Levy recognised the difficulties weighing on major advertisers from consumer products groups to car makers: "They are very attentive to protecting their margins amid rising commodity prices, but at the same time they don't want to lose market share."

"We haven't yet seen any major advertisers cut their budgets," he added. Publicis won $1.9bn in new business in the first quarter, notably a $1bn contract with Microsoft, said Levy.

Sales in North America grew 8.1 per cent to €638 million, while Europe, led by Germany and France, grew 6.2 per cent to €409m. Emerging countries like Brazil, Russia, India and China grew on average more than 11 per cent.

Separately, Levy said Publicis was prepared to use its cash to buy back shares if its largest shareholder, Japan's Dentsu, which holds roughly 11 per cent, decided to sell. Dentsu has a window until July 2012 during which it can sell some or all of the stake it owns, or hold on to it.

"First it is up to Dentsu to decide what it wants to do," said Levy. "If they decide to sell, we would bid to buy back the shares and cancel them."