Interpublic Group of Cos. on Friday reported earnings for its fourth quarter of 2016 and the full year that beat analyst expectations, as well as an increase in revenue and net income.
Organic revenue, a measure that excludes the effects of acquisitions and currency fluctuations, increased 5.3% to $2.26 billion in the fourth quarter of 2016 from the equivalent period a year earlier, the holding company said Friday.
For the full year, IPG said organic growth rose 5% to $7.85 billion. In October, the company increased its full-year 2016 organic growth targets to a range of 4% to 5% from somewhere between 3% and 4%.
"From a macro standpoint, as we all know, 2016 was a year of profound geo-political change in key world markets, which has the potential to bring new uncertainties to the business world as we head into the new year," IPG CEO Michael Roth said on a conference call to discuss the results. "With respect to the U.S. and the U.K., while these uncertainties bear watching, we have not to date seen significant underlying changes to the solid demand for our services that has characterized the last few years."
The marketing services giant, which has a portfolio including agency groups McCann Worldgroup, FCB, IPG Mediabrands and Weber Shandwick, reported net income of $317.6 million during the fourth quarter, compared to $260.3 million for the period last year. Full-year 2016 net income was $608.5 million, compared to $454.6 million for 2015.
Nothing was mentioned on the call regarding the Department of Justice Antritrust Division investigation into production practices at IPG and other holding companies. Interpublic Group confirmed in December that one of the holding company's standalone domestic agencies had been contacted by the Justice Department. IPG rivals Omnicom Group and Publicis Groupe have said their subsidiaries have also been contact.
"The tone of our business remained solid through year-end, especially in the U.S., which is a key market for us," Mr. Roth said on the call.
Organic revenue in the U.S. rose 3.3% in the fourth quarter and 4.4% in the full year, according to the company. U.S. fourth-quarter growth was led by the IPG Mediabrands media agency network, as well as Huge, R/GA, and MullenLowe.
On a sector basis for the full year, Mr. Roth said growth was strong among food and beverage, tech and telecom, health care, government services and retail.
IPG plans on continuing to invest in Mediabrands' "already considerable data and analytics capabilities, which we believe will become the data stack and platform that will serve all of our agencies and their clients, as we push for even more accountability in our marketing programs," Mr. Roth said on the call. As for R/GA, he applauded the shop's expansion of service offerings, such as business transformation consultancy and the connected office space.
For 2017, Mr. Roth is targeting growth of 3% to 4%, saying that the state of industry and new business activity remain healthy, "despite macroeconomic and political uncertainty."
"The breadth and strength of our portfolio positions us well to participate in most all pitch opportunities, and there is growth to be had by addressing the emerging needs of our existing clients," he said on the call.