Omnicom reports 2.5% rise in quarterly revenue

Monday, 24 April 2017 00:06 - - {{hitsCtrl.values.hits}}

Reuters: The world’s second-largest advertising company Omnicom Group Inc reported slower-than-expected growth in North America, overshadowing a quarterly profit and revenue that beat estimates.

Revenue rose 2.5% to $3.59 billion, beating estimates of $3.55 billion.

The company’s organic revenue in the North America rose 1.1% to $2.14 billion, missing the average analysts’ estimate of 2.1%, according to market research firm FactSet StreetAccount.

North America is Omnicom’s largest market, and accounts for about 60% of its revenue.

Investors will be weary about the U.S. growth numbers being light, Pivotal Research analyst Brian Wieser said.

U.S. growth was tepid again...despite significant new business wins, as media and advertising gains were offset by declines in events, field marketing and branding businesses, Wieser added.

The company would remain cautious as numerous geopolitical and macroeconomic events remain unresolved, Chief Executive John Wren said on a call with analysts on Tuesday.

“(Omnicom) still unclear on how legislation in several major areas (in the U.S.), including the budget, tax reform, infrastructure spending and health care, could impact the economy,” Wren said.

However, New York-based Omnicom said organic revenue grew 8.1% in the UK and 8.2% in Europe, for the first quarter ended March 31.

The company said its international revenue for the quarter was $1.45 billion, edging past FactSet estimates of $1.44 billion, allaying some concerns about its growth abroad following UK’s decision to leave the European Union.

Omnicom, owner of agencies such as BBDO Worldwide, TBWA Worldwide and Goodby Silverstein & Partners, is being investigated by the U.S. Department of Justice along with fellow rivals such as Interpublic Group of Companies Inc and Publicis Groupe SA over rigged bids to favor in-house production units.

Top advertising companies worldwide are increasingly looking to boost presence in digital media, with print ads drying up.

Omnicom — which serves over 5,000 clients worldwide, including Procter & Gamble, Cisco Systems Inc and McDonald’s Corp — said net income rose to $241.8 million, or $1.02 per share, in the quarter, from $218.4 million, or 90 cents per share, a year earlier.

Excluding items, Omnicom earned 97 cents per share, beating the average analysts’ estimate of 96 cents, according to Thomson Reuters I/B/E/S.