Publicis Q3 Earnings Steady, End of Year Looks Grim

French ad behemoth Publicis posted Q3 earnings today, and if it weren't for those pesky exchange rates between the Euro and the Pound, their revenue would be up. Had the rates stayed constant, Publicis would have posted earnings of 6.8 percent. As it stands, Publicis' earnings for the quarter were respectably flat, with revenue falling 1.5 percent to 1.105 billion euros (£883 million). While Publicis appears to be weathering the slowed economy well so far, their outlook for the rest of the year and 2009 is less optimistic.

Maurice Levy, Chairman & CEO of Publicis Groupe, says:

"The third quarter ended with higher organic growth than we expected, and finished better than we might have feared, given the turmoil in the world-wide financial system. These disturbances pushed the mature economies into a zone of turbulence, of which it is difficult to foresee either the intensity or the duration. In this context, we believe our industry will face a difficult end of
2008 and a marked slowdown in 2009."

In their release, Publicis expressed concern for developed markets in the coming year. However, Levy has confidence in Publicis' 'trump cards": their stable relationships with large clients, a diversified portfolio, and a range of differentiated and well positioned operations.

Publicis is pinning its hopes in 2009 on digital (which has led rowth in North America so far this year) and high growth markets (which represented 22.7 percent of profits in the first three quarters). The company plans to manage cashflow, consolidate its balance sheet, reduce acquisition, "to come out of the crisis with a much better balance sheet than we went into it with.''

Levy said that he is "sticking" to his forecasts of operating margins of 16.5 percent this year and organic sales growth higher than the 3.1 percent achieved in
2007. Shares in Publicis were up five percent on the news.