EuroBusinessMedia (EBM) : Publicis Groupe, the world’s fourth largest advertising company just reported revenues for the first quarter of 2008. Maurice Levy welcome. You are the chairman and CEO of Publicis Groupe. What are your comments on the group's performance in the first quarter? Does this performance meet your expectations?
Maurice Lévy (ML) : We had a very good first quarter with organic growth of 5.4% and with some very good information on how some markets have performed, particularly the US, which is about the same level, 5.3%. Emerging markets have been very strong; and all our activities have been delivering good growth.
EBM : Has each and every part of your business performed well, or do you see some difficulties still in the healthcare business?
ML : Healthcare is about in the same trend as the end of last year, so still negative, and we don’t see healthcare becoming positive before the last part of the year; but everything is planned in order to deliver a good growth at the end of the year. So healthcare should be in a good position. Regarding the rest we are very satisfied, with maybe two important informations: one is on digital - where we have growth above 20% and Digitas as a stand-alone has delivered 23% - and on media we had a double-digit growth.
EBM : What is your update on the situation in the US? Is the macro-economic environment having an impact on your US business?
ML : As I said, and as incredible as it can be, we have, for the time being, very few negative informations. We know that the situation is not very strong: we know that there are some issues regarding the credit crunch. We know also that inflation is coming back; and we know that the confidence of consumers is relatively low. This being said, the informations we have in hand from our clients are still good. How long it will last is very difficult to say; but for the time being we have no strong signals of a heavy cut in the budgets of our clients for the US.
EBM : The French and U.K. markets were showing robust growth in January and February. WPP then surprised the market with bad numbers for the month of March in Western Europe. Are you seeing a similar pattern?
ML : No, we have a different situation. I don’t know if it has to do with a different portfolio of activities; for the time being our activity is very strong, including in those markets. When I say “very strong” it is compared to the economy of Europe, because 3.2% organic growth is not huge; but compared with what is going on in Europe, it is relatively good and we have no strong signs of slow-down in Europe.
EBM : What about the emerging economies? What is your growth there?
ML : We have 11% if we include all the emerging markets, which means including Central Europe, some Latin American markets, etc. If we concentrate on what we call “le CRI” in French, which means China, Russia and India, we have 21.4% growth.
EBM : You ranked Number 1 in terms of new business in the first quarter. Does this enable you today to be more precise about your organic growth targets for 2008, beyond your initial comments that organic growth will accelerate this year compared to 2007?
ML : We decided not to make any comments on the full-year organic growth and not to give any guidance, simply because there is a lot of speculation and the market has seen some hesitation. If we look at the new business, it is very strong; we have some very good news coming from a lot of areas, and what is good is that all our operations are contributing to our new business. So we believe that we will deliver a very good year of growth. We believe that we should outperform the average of the market; and we will see down the road.
EBM : You reached your 16.7% margin target a full one year ahead of schedule. Given the strong decline of the US dollar, how sustainable is that level of margin this year? And looking beyond this year, are setting yourself a new medium-term margin target?
ML : Our strategy is first to make that level of margin rock solid, so what I would like very much to do is to get the market used to get, on a regular basis, from Publicis a margin between 16.5 and 17 per cent; 16.5 should be a floor; and this would make us still the best performer. Once we have - particularly in a period like the one we know - this solidly consolidated, then we will move to a new target. I am very hopeful that we will be able to deliver a new target in maybe one or two years; but for the time being, our job is first to make – as I said – this level of margin rock solid.
EBM : Taking a shorter-term view can you give us an update today about your level of margin or margin improvements at the end of the first quarter?
ML : The margins, as well as all our financial indicators, are exactly on plan. So we are pleased with the numbers that we have reached at the end of March.
EBM : Earlier this year, you announced that you were in discussions with Google, without providing too much detail. Has anything come of these discussions with Google?
ML : We have given as much detail as we could, which is that this agreement is made to exchange people, to better understand each other’s business, to make sure that we understand technology better than our competitors, and that they do understand the consumer needs and the brands’ needs better than any of their competitors. So this is something that we announced, and we are working on these plans. For the time being there is nothing new which is so important that has to be disclosed to the market.
EBM : Are you satisfied with the size of your digital activities? Do you intend to grow them through acquisitions or will organic growth alone allow you to meet this fast growing market?
ML : First of all, I am never satisfied; so saying “are you satisfied” is leading immediately to complacency. I’m not satisfied; but I am happy with the developments. I believe that we are on a right trend and that we are directionally exactly where we should be and slightly ahead of our own schedule. We have reached for the first quarter – and I hope that we will have the same trends in the end of the year – a level of 18.4% of all our activity in pure digital, which is huge, and which is far better than any of our competitors. This is to reach the level of 25% in 2010; so I think that we have, with the current trend and the level of growth that we have in our operations – I am sorry to repeat it, but when you have Digitas 23% increase in the revenues is helping and this is also showing how right we were in acquiring Digitas. So we believe that we will reach the level of 25% by 2010 and we will be close to 20%at the end of this year.
EBM : Maurice Lévy, Chairman and CEO of Publicis Groupe, thank you very much.
ML : Thank you.
