Interpublic Continues to Show Profit Gains

Revenue Also Rises, in U.S. and Abroad

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Interpublic CEO Michael Roth.
Interpublic CEO Michael Roth. Credit: Tony Avelar/Bloomberg

Interpublic Group's net income grew to $123.8 million in the second quarter, up 1.6% from the quarter a year earlier, the agency holding company said Wednesday morning.

Total revenue increased 1.3% to $1.88 billion. Organic revenue, excluding one-time factors such as acquisitions and external forces such as currency fluctuations, increased 6.7%.

Operating income rose 10.2% to $215.8 million, with a margin of 11.5%, up from 10.6% during the same period last year.

The marketing services giant has a portfolio including agency groups McCann Worldgroup, FCB and IPG Mediabrands.

The results beat analysts' expectations of a 0.8% decline in revenue for the quarter, according to Yahoo Finance. The company also reported $0.30 earnings per share, which beat analysts' expectations for $0.27.

By comparison, IPG's first quarter brought a net loss of $1.8 million, improving from a net loss of $20.9 million during the same time last year, and its first quarterly operating profit in over a decade. First-quarter operating income totaled $7.8 million, a turnaround from the $11.7 million operating loss a year earlier.

U.S. revenue for the second quarter increased 7.7%. International revenue was up 5.3%.

On the back of a couple successful quarters, the company said it's raising its target from 3-4% organic growth to a new range of 4-5% for the full year.

"We are pleased to report another quarter of strong organic revenue as well as profit growth," said CEO Michael Roth in a statement. "We remain focused on cost discipline, as evident in our results, as well as committed to capital return programs that remain a source of significant value creation. At the midway point of the year, we believe that the appropriate organic growth target for 2015 is now 4-5%."

IPG is confident it can hit those targets despite the unprecedented number of media agency reviews, which Mr. Roth referred to throughout the earnings call. He said that the media reviews that end before the end of the year likely won't impact the company's financials until 2016. Although his media agencies are defending a number of accounts, it's also going after new opportunities and turning down opportunities to pitch where there are conflicts.

"The volume of media business that is in play is a function of clients' continual demand for greater efficiencies, as well as cyclical reviews on the part of some clients," he said of the heightened review activity. "It's also a reflection of the fact that technology is impacting communications planning and media investment decisions. At the moment, it also looks as if the elevated level of media reviews seems to have led to a slight dip in account reviews in other disciplines."

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