Advertiser Publicis’ shares slide after sales miss forecasts

Publicis’ relatively weak performance followed a sales warning from WPP in August. (Reuters)
Updated 19 October 2017
0

Advertiser Publicis’ shares slide after sales miss forecasts

PARIS: Advertising agency Publicis, facing fierce new competition from the growth in online advertising, posted third-quarter sales on Thursday that missed market forecasts and sent its shares lower.
The world’s third-largest advertising group behind WPP and Omnicom said sales had risen 1.2 percent on a like-for-like basis to €2.264 billion ($2.67 billion).
However, this came in below an average forecast for €2.34 billion from analysts polled by Reuters.
Publicis’s shares slid 6.6 percent to €58.09 in mid-session trading, making the stock the worst performer on France’s benchmark CAC-40 index.
Shares in industry leader WPP also fell 2.7 percent.
Publicis’s new boss Arthur Sadoun said the market for advertisers remained challenging — something that was further highlighted on Thursday when Sky said it was launching a review of its advertising budget.
Publicis’s relatively weak performance followed a sales warning from WPP in August that had sent WPP shares down by more than 10 percent.
Sadoun took a swipe at WPP for blaming cutbacks in advertising spending by consumer goods giants for the woes of advertising companies.
“I think it’s a dangerous mistake to blame the problems of our industry on challenges that our customers could be facing,” said Sadoun.
Publicis and its peers are under pressure to overcome changes in consumer behavior, with Internet titans such as Google and Facebook having transformed the industry by using data to better target advertising.
Sadoun has followed on from his predecessor, company veteran Maurice Levy, in focusing on more digital consulting to compete with consultancies such as Accenture and IBM.
Digital consultancy entails advising companies on how their websites and mobile platforms look, and on their Internet advertising and marketing strategies.
Rival Omnicom reported a drop in third-quarter revenue this week, due in part to competition from the likes of Accenture and IBM, although its numbers topped estimates.
Sadoun has not endorsed Levy’s previous financial performance targets for 2018 which included an operating profit margin of 17.3 to 19.3 percent. Publicis’s first-half operating margin stood at 13.2 percent.
Publicis has already been reorganized over the last 18 months under a project dubbed “The Power of One,” aimed at fostering greater cooperation between its myriad agencies.
“Publicis’s below-forecast organic revenue growth may check the more positive sentiment on the agencies that had been seen post-Omnicom’s Q3 results, which beat expectations in North America,” analysts at brokerage Liberum wrote in a note.


Oil prices up almost 3 pct as OPEC agrees to raise output

Updated 22 June 2018
0

Oil prices up almost 3 pct as OPEC agrees to raise output

  • Oil prices rose almost 3 percent on Friday as OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand.
  • The Organization of the Petroleum Exporting Countries agreed on Friday to boost output from July.

LONDON: Oil prices rose almost 3 percent on Friday as OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand.
Benchmark Brent crude jumped $2.19 a barrel, or almost 3 percent, to a high of $75.24 before slipping to around $75 by 1305 GMT. US light crude was $1.80 higher at $67.34.
The Organization of the Petroleum Exporting Countries, meeting in Vienna, agreed on Friday to boost output from July after Saudi Arabia persuaded Iran to cooperate in efforts to reduce the crude price and avoid a supply shortage.
Two OPEC sources told Reuters the group agreed that OPEC and its allies led by Russia should increase production by about 1 million barrels per day (bpd), or 1 percent of global supply.
But the real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas while other producers will not be allowed to fill the gap.
The deal looked to be in line with many analysts' forecasts.
Analysts had expected OPEC to announce a real increase in production of 500,000 to 600,000 barrels per day (bpd), which would help ease tightness in the oil market without creating a glut.
"The effective increase in output can easily be absorbed by the market," Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas told Reuters Global Oil Forum.
Oil prices have been on a roller-coaster ride over the last few years, with the international marker, Brent, trading above $100 a barrel for several years until 2014, dropping to almost $26 in 2016 and then recovering to over $80 last month.
The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories.
The group started withholding supply in 2017 and this year, amid strong demand, the market tightened significantly, triggering calls by consumers for higher supply.
Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of US sanctions, have all increased market worries of a supply shortage.
Another big uncertainty for oil is the escalating dispute between the United States and its trading partners, which could hit US crude oil exports to China.
Asian shares hit a six-month low on Friday as tariffs and the US-China trade battle start taking their toll.
If a 25 percent duty on US crude imports is implemented by Beijing, American oil would become uncompetitive in China, forcing it to seek buyers elsewhere.
Chinese buyers are already starting to scale back orders, with a drop in supplies expected from September.