Publicis Groupe SA (PUBGY) shares fell to the bottom of the Paris market Thursday after the world's third-largest advertising group revealed a heavy write-down on its digital business.
The Saatchi & Saatchi owner's shares fell nearly 5% in the opening hour of trading to change hands at €60.05 each in Paris, making it the biggest decliner on the CAC 40.
Publicis said it would take an impairment charge of €1.39 billion ($1.49 billion) for its digital business leading the company to a net loss of €527 million for 2016. In November, Publicis merged its digital divisions Razorfish with SapientNitro to create SapientRazorfish.
CEO Maurice Levy, who will step down later this year after 30 years at the helm of the group, told reporters that the digital unit would not reach "very aggressive" target of more than 7% organic growth, the Wall Street Journal reported. "We had a business plan that was probably too ambitious," Levy said.
The world's third largest advertising agency, saw organic growth drop 2.5% in the fourth quarter, with revenue of €2.7 billion. The quarter was dragged down by a 6.9% drop in North America. About half of the French group's revenue comes from the U.S. but it has been hurt by the loss of several high profile accounts, including Procter & Gamble (PG) , Coca-Cola (KO) and Mondelez (MDLZ) .
Revenue for the full year increased 1.4% to €9.7 billion.
"The first half of 2017 will still bear the marks of previously difficulties, but as of the second half year, the group should be back to levels of growth which are more comparable to its peers," Levy said.
