by Olivier Sorgho
(Reuters) – Publicis raised its annual forecast on Thursday after reporting higher-than-expected organic net income growth in the third quarter.
The communications group is now targeting organic growth of between 5.5% and 6.0% for 2023, compared to around 5% previously.
Publicis had already raised its annual forecasts in July.
The group’s net income stood at 3.24 billion euros in the third quarter, representing organic growth of 5.3% year-on-year. Analysts had expected growth of 3.6% according to a consensus compiled by the company.
Publicis’ announcements come as the advertising industry is experiencing a slowdown. Publicis’ rivals WPP and Interpublic each lowered their annual forecasts this year, citing lower spending by their technology clients.
“We are seeing budget cuts in the area of traditional advertising,” said Publicis Chairman and CEO Arthur Sadoun during a conference call, also highlighting a weakening of the digital transformation market.
However, he added that the diversification of services offered by Publicis and its ability to obtain market share would allow the group to compensate for this slowdown.
The group also anticipates an operating margin rate of 18%, compared to close to 18% previously, and free cash flow before working capital requirements close to 1.7 billion euros, compared to at least 1.6 billion euros previously.
(Report by Olivier Sorgho; by Camille Raynaud, edited by Kate Entringer)
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