Omnicom Fourth-Quarter Profit Beats Expectations

U.S. Revenue Rose 5%; Eurozone Still a Trouble Spot

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Omnicom reported higher-than-expected fourth-quarter profit, up 12.9% from the prior year.

For the fourth quarter, net income rose to $307.1 million from $271.9 million a year earlier. Revenue increased 2.4% to $3.94 billion. Revenue in the U.S., which accounts for about half of Omnicom's total revenue, rose 5.1% to $2.03 billion. International revenue fell 0.3%.

Worldwide revenue for the year increased 2.5% to $14.2 billion from $13.8 billion. U.S. revenue for the year rose 4.5% to $7.3 billion from $7 billion. International revenue increased 0.5% to $6.8 billion.

Like other advertising holding companies, Omnicom has seen the eurozone as a problem area, as well as slowed growth in China, but noted strong performance in Brazil, Russia, Singapore and India, along with others. The company noted that it continued to expand its presence in India and China through acquisitions; it also continues to strengthen capabilities in consumer insights and analytics.

Omnicom President-CEO John Wren also noted concerns in the U.S. due to the so-called fiscal cliff during the fourth quarter. "The impending decisions to be made by Congress and the [Obama] administration will impact overall economic growth this year," he said during an earnings call.

In the fourth quarter, the company's organic revenue from advertising, which makes up about half of its business, grew 4.5%; for the year it increased 6.6%. CRM, which accounts for about 35% of the revenue, for the quarter dropped 6.6% but was up 2.3% for the year. Organic growth for PR revenue was up 8.4% for the quarter and up 3.3% for the year.

The company said it had strong performance from clients in the retail, automotive and technology sectors, but financial services was pulled down due mostly to BBDO losing the Bank of America account to a WPP team.

For 2013, Mr. Wren noted that some economic challenges persist but that Omnicom's expectations for 2013 are "modest." "While the macroeconomic environment appears to be stabilizing and even improving in some areas, issues in several markets remain unresolved. As a result, we have planned for another year of modest global growth but remain nimble enough to take advantage of opportunities as they arise."

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