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Publicis cuts guidance after disappointing second quarter revenue growth

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By Reuters
Publicis cuts guidance after disappointing second quarter revenue growth
The logo of Publicis group is seen at the high profile startups and high tech leaders gathering, Viva Tech,in Paris, France May 16, 2019. REUTERS/Charles Platiau   -   Copyright  CHARLES PLATIAU(Reuters)
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By Mathieu Rosemain and Gwénaëlle Barzic

PARIS (Reuters) – Publicis, <PUBP.PA> the world’s third-biggest advertising group, cut its 2019 growth guidance on Thursday after reporting a weaker-than-expected performance in the second quarter as it struggles to revive sluggish sales in the United States.

Publicis, whose revenue is being squeezed by competition from Facebook <FB.O> and Google <GOOGL.O> as well as tightening ad budgets by major clients, now expects a “broadly stable net revenue” in 2019, excluding the impact of acquisitions and foreign exchange.

Publicis previously had forecast a higher growth of its revenue on an organic basis in 2019 than in 2018, but gave no precise figure.

In 2018, its organic revenue growth amounted to a meagre 0.8%, excluding the underperformance of a U.S. business that it sold in January.

The group posted second-quarter 2019 organic growth of 0.1 percent, missing a market consensus estimate of 0.7 percent, as the gains of key media budgets for GlaxoSmithKline <GSK.L> and Fiat-Chrysler <FCHA.MI> failed to offset weaker sales in the United States, its number one market.

This compares with the 2.8% organic growth posted by bigger U.S. rival Omnicom <OMC.N> over the same period.

“We still face the same issue, as anticipated, as our contracts on traditional ads in the United States continue to suffer,” Chief Executive Officer Arthur Sadoun told reporters ahead of the results.

The underperformance also led the group to put its ambitious 2020 targets under review. Publicis expected an underlying sales growth target of 4 percent — an objective that many analysts have considers as nearly impossible to attain.

Sadoun cited the recent $4.4 billion (£3.5 billion) takeover of data-focused marketing business Epsilon as the main reason for putting the longer term targets under review.

Despite the lower revenue growth forecast, Publicis confirmed its 2019 operating margin and EPS targets.

(Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by GV De Clercq)

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