* Sees yearly organic sales down 2.5%
* Q3 organic sales down 2.7%
* Cuts 2020 revenue growth guidance
(Adds details)
By Mathieu Rosemain
PARIS, Oct 10 (Reuters) - Publicis' chief executive Arthur
Sadoun appeared under pressure on Thursday following a second
cut to the full-year sales target of the world's third-biggest
advertising group.
The change in company guidance reflected yet again the
hardships that traditional ad groups face, with revenues being
squeezed by competition from Facebook and Google
as well as tightening budgets by major clients.
Sadoun, who succeeded company veteran and current chairman
Maurice Levy in 2017, has promised to offset the decline in ad
spending by steering the business closer to consulting groups
and offering clients technological tools on top of traditional
creative marketing campaigns.
This strategy is taking more time than expected to bear
fruit, as Paris-based Publicis cut its full-year
revenue target following poor third-quarter results hit by a
fall in spending by U.S. clients and a disappointing performance
by its digital arm.
Publicis also pointed to weaker revenue from media
operations.
"We have taken the tough but necessary decisions needed to
tackle the industry challenges we are facing head-on," Sadoun,
48, said.
"We are without a doubt at the hardest part yet of our
journey and as is the case with any major structural change,
things always get worse before they get better."
TOUGH JOURNEY
The advertising group, which competes against bigger rivals
WPP and Omnicom, said it now expected sales to
decline by about 2.5% on an underlying basis, compared to a
previous outlook of a "broadly stable net revenue".
This is the second cut to Publicis' yearly financial
guidance in 2019. Third-quarter sales fell by 2.7% on an
underlying basis to 2.58 billion euros ($2.8 billion).
The company brought forward the publication of its
third-quarter results by a week, after a negative analyst note
hit shares, Sadoun said on a conference call.
The group now anticipates underlying sales in 2020 to evolve
in the range of -2% to +1%, compared to an ambitious target of
an increase in underlying sales of 4% - an objective that many
analysts considered nearly impossible to attain.
The company maintained a solid full-year operating margin
guidance of 17.3%, excluding transaction costs related to the
$4.4 billion acquisition of data-focused marketing business
Epsilon, prompting skeptical questions in a call with analysts.
Through Epsilon, Publicis hopes to beef up its data and tech
expertise following the difficult absorption of digital ad
business Sapient, bought in 2015.
Several analysts wondered how Publicis could keep such
margin targets while cutting revenue guidance.
Sadoun replied that new offers led by Sapient created more
value than traditional creative products.
($1 = 0.9079 euros)
(Reporting by Mathieu Rosemain
Editing by Nick Zieminski and Alexandra Hudson)