Publicis first-quarter sales beat expectations

Publicis shares saw their biggest rally in more than a year after the French advertising group led by Maurice Levy reported first-quarter sales that came in above market expectations.

The stock was trading at €76.22 by lunch time, 5.6 per cent higher than the previous day's close, after the owner of the Saatchi & Saatchi and Leo Burnett ad agencies said that first-quarter organic revenue rose 0.9 per cent compared with the same quarter of last year.

Analysts had expected the figure to be 0.5 per cent higher at best. In a note on Tuesday, Claudio Aspesi at Bernstein described the sales figures as "a nice upside surprise and we suspect there might be more to come".

The Paris-based group said that it had sales of €2.1bn during the first three months, outpacing market estimates of €1.99bn - and increasing 31.7 per cent on a reported basis.

That jump was largely thanks to the inclusion of Sapient, following its acquisition of the Boston-based advertising and consultancy in a $3.7bn all-cash deal first announced last November.

Publicis also benefited from the weaker euro, with exchange rate fluctuations contributing a positive impact of €215m - or 13.5 per cent of revenue during the period.

In a statement, Mr Levy, Publicis's chief executive, said that the unexpected return to growth "isn't yet the growth rate we expect to see out of Publicis Groupe". He forecast that the second quarter would be better and the second half of the year to be "considerably stronger".

The stronger figures will doubtless come as a welcome relief after a difficult 2014 when Mr Levy's plans to carry out a $35bn "merger of equals" with US rival Omnicom came unstuck when the proposed tie-up ran into regulatory delays and differences broke out over senior management appointments.

The deal was promoted as a bet that scale in media and marketing was necessary as technological upheaval was changing the nature of advertising. Mr Levy later admitted that the considerable effort to make the merger work had proved a "distracting" force from Publicis's day-to-day business.

Tuesday's figures suggest that Publicis may finally have put the episode behind it. Organic sales in Europe grew 1.7 per cent during the quarter, with both France and Germany offsetting the UK market.

Sales in North America held up, growing 0.8 per cent in organic terms in the first quarter compared with the same period a year earlier.

Mr Aspesi of Bernstein said: "We continue to believe that Publicis will outperform in 2015 and first-quarter results indicate that the company may be truly past the post-Publicis-Omnicom deal."

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