Interpublic Group of Cos. today announced its first-quarter earnings, noting that it narrowed its net loss compared to the same period in 2011.
Its net loss was $45.9 million compared to a net loss of $48.1 million in the prior year period. Revenue was up, however, to $1.51 billion in the quarter compared to $1.47 in the first quarter of 2011.
"We know that Q1 is our smallest revenue period seasonally" and the "headwinds we are facing will be less pronounced in the second half of the year," said Interpublic CEO Michael Roth on a conference call with analysts. "We have consistently cautioned against putting weight on a single quarter's results. That said, we remain comfortable with the full-year 2012 goals of 3% organic revenue growth."
Regionally, the company was led by double-digit growth in Asia-Pacific, said Mr. Roth, followed by growth in Latin America, the U.S. and U.K. He noted -- as have other holding companies in their earnings reports -- that revenue decreased in continental Europe, where macroeconomic conditions continued to pose a challenge.
Mr. Roth pointed out that client sectors such as auto and retail had double-digit growth, as well as growth in the financial services and food and beverage client sectors. He added that strong performers in the quarter include some of the company's global advertising networks, U.S. integrated indie agencies -- which could include Hill Holliday, Martin and Mullen -- MediaBrands and Lowe . For its CMG Group, Mr. Roth said that PR agencies, particularly Weber Shandwick and Golin Harris, produced strong results. He added that its sports-marketing agency Octagon is having a "very good year," as is Jack Morton, the company's experiential-marketing shop.
The company's digital capabilities were called out, as Interpublic "continues to see the benefits of our digital strategy in which the primary pillar is embedding digital talent at all of our agencies," said Mr. Roth, who also gave credit to pure-play digital agencies such as R/GA, Huge and MRM, which is part of the McCann network.
Mr. Roth expressed his confidence that McCann -- which has been facing account defections and has been undergoing a reinvention -- will benefit by adding "meaningful incremental GM markets and revenue internationally," the formation of Commonwealth, the Interpublic and Omnicom agency created to house the global General Motors Chevrolet win. McCann Worldgroup added Merck as a client within the health-care business, but McCann lost a number of accounts last year, including Applebee's, Nescafe and Lufthansa.
DraftFCB, he said, has made headway domestically in replacing the revenue loss that resulted from the defection of the global SC Johnson business last year, through digital and CRM wins on Cox Communications and Discover Card. He added that Interpublic began seeing the loss on its balance sheet in December, with an expected 2% to 3% "headwind" in the first half of the year.
Mr. Roth also made mention of two major new-business pitches the companies' agencies are participating in: Unilever and Bank of America. For Bank of America, the pitch is being led by Hill Holliday, which currently handles global wealth-management and corporate-social-responsibility marketing. He also noted that the U.S. Post Office account, which is currently handled by Campbell Ewald and DraftFCB, is in review, but is not expected to be resolved until later this year.
Surprisingly, not mentioned -- or even asked about by analysts -- during the call was the $50 million lawsuit against Interpublic filed earlier this month by a Trinidadian employee of the company who claimed race discrimination.
Named in the suit were Interpublic Chairman-CEO Michael Roth; former Senior VP-General Counsel Nicholas Joseph Camera, former VP-Associate General Counsel and Assistant Secretary Marjorie Mary Hoey, and Carolyn Harding, Interpublic's director of human resources in the U.S. and Latin America.