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Publicis sees return to sales growth in 2010

French advertising company Publicis said it expected to return to sales growth next year and kept its 2009 outlook intact after the global economic downturn hit first-half earnings. The world's third-largest advertising group by revenue predicted trading in the third quarter would “deteriorate” less than during the previous three months. It saw a low point for Publicis and the sector in July and a slow recovery starting in September.

Publicis, a key player in digital advertising since the acquisition of Digitas, also expressed interest in Razorfish, the digital ad agency of Microsoft if it was for sale.

“I do not know if Razorfish is for sale. If there was ground to this scenario, Razorfish would undoubtly be among the companies that would be nice to have but given our positions in digital it would not be a must have”, Chairman and CEO Maurice Levy told journalists.

With liquidity of €3.5 billion at end-June, Publicis was comfortable to look at acquisition opportunities, he said.

Ealier this month, The Wall Street Journal, citing executives familiar with the situation, said that Microsoft was pitching to five of the world's biggest advertising companies, including Publicis, to buy Razorfish. Publicis wants digital advertising to account for 25% of its revenue by 2010 against 20.8% now.

Levy reiterated that the economic crisis would hit Publicis revenue and margin in 2009 but with net new business of $3.2 billion at end-June, Publicis hoped to outpace rivals. Publicis expects 2009 sales to decline but to outperform the 8%-9% fall expected for the sector, Levy said. The group's 2009 operating margin was forecast to decline from last year's record 16.7% but cost cuts would help cushion the drop. “We should renew with our record margin levels in 2-3 years,” Levy said. (Reuters)