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By Mathieu Rosemain and Gwénaëlle Barzic
PARIS, Feb 11 (Reuters) - France's Publicis predicted "modest organic growth" for 2016 but avoided settingprecise full-year targets as it digests a $3.7 billionacquisition and pledges to reorganise its businesses internally.
The world's third-biggest advertising group also foresaw anincrease of its sales and operating profit in 2016, which itcalls a "year of transition."
The Paris-based company needs that time to be back in linewith the organic growth of its rivals in 2017 and beat them onthat gauge in 2018, Chief Executive Officer Maurice Levy toldjournalists at a briefing.
Levy's caution comes after a year of contrasted quarterlyperformances that forced Publicis to cut its annual organicgrowth target in October to 1 percent from an initial 2.5percent.
The group posted on Thursday a fourth-quarter organic salesgrowth of 2.8 percent on revenue of 2.73 billion euros ($3.09billion), notably driven by strong demand in North America,Publicis' first region by revenue.
This brought the group's yearly organic growth to 1.5percent on sales of 9.60 billion euros, beating the Reutersconsensus of 0.9 percent.
Publicis also generated a record yearly free cash flow ofabout 1.1 billion euros. It plans to pay a dividend of 1.60euro, up 33.3 percent from a year earlier.
"The free cash flow is once again significantly higher thanexpectations, which illustrates the soundness of Publicis'model, despite an organic growth that is slightly weaker thanpeers on the short term," said Jerome Bodin, an analyst atNatixis.
Publicis, which competes against London-based WPP and New York-based Omnicom, is trying to win backinvestor support after the agency's growth lagged behindcompetitors because of the fallout from the failed Omnicom dealtwo years ago.
The full integration of digital and ad specialist Sapient,bought for $3.7 billion in cash a year ago, and the internalreorganisation of Publicis' agencies internally to fostergreater collaboration and better serve clients will be the twokey drivers to success, Levy says.
Publicis' shares have fallen by more than 21 percent overthe last twelve months to close at 52.72 euro.
Omnicom said Tuesday that its fourth-quarter organic salesgrowth was 4.8 percent. WPP, the top advertising company in theworld, will report full-year earnings on March 4, while Havas will do the same on Feb. 25. (Reporting by Mathieu Rosemain and Gwenaelle Barzic, editing byAlister Doyle)
WPP (WPP)
