Omnicom reports better than expected quarter results

Reuters: Omnicom Group Inc reported better-than-expected quarterly results as the No. 1 US advertising company benefited from higher spending from businesses in Europe and the United Kingdom.

That helped allay some concerns about growth abroad following Britain’s decision to leave the European Union. International sales made up about 43% of total revenue in the quarter.

The company said organic revenue rose 9.3% in UK and 7.8% in Europe in the quarter ended 30 June. In North America organic revenue rose only 0.2%.

Robin Diedrich, senior analyst at Edward Jones, said in a note on Thursday that Omnicom’s North America organic sales growth marked one of the weakest quarterly growth rates since 2009.

The ‘Trump Bump’ or the rise in the market after the election of US President Donald Trump has waned and gridlock in Washington has cause companies to pause investments, Omnicom Chief Executive John Wren told investors on a conference call.

Advertising and marketing sectors suffered as a result, he added.

Advertising companies have been exploring new revenue streams and are trying to keep up with clients’ increasing demand for video content amid growing competition from consulting firms.

Smaller rival France’s Publicis earlier reported a modest rise in underlying sales, compared with analysts’ estimate of a small drop, driven by a surge in revenue in North America, its biggest regional market.

Omnicom’s revenue fell 2.4% to $ 3.79 billion in the second quarter, but beat estimates of $ 3.74 billion, according to Thomson Reuters I/B/E/S.

The company, owner of agencies such as BBDO Worldwide, TBWA Worldwide and Goodby Silverstein & Partners, said the stronger US dollar hurt revenue.

New York-based Omnicom, whose clients include Apple Inc, McDonald’s Corp and Adidas, said net income attributable to the company rose to $ 328.6 million, or $ 1.40 per share, from $ 326.1 million, or $ 1.36 per share, a year earlier. Analysts had expected a profit of $ 1.38 per share.