Omnicom Group Posts First Quarter Profit of $205 Million

CEO John Wren Brushes Off Chevy Loss, Optimistic About U.S. Economic Performance

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Omnicom Group on Thursday reported a slight increase in profit for the first quarter of 2013.

Net income rose to $205.1 million, compared with $204.6 million in the first quarter of 2012, said the New York-based ad holding company. It is the parent of global creative networks DDB Worldwide and BBDO Worldwide as well as media agencies PHD and OMD.

The company said worldwide revenue increased 2.8% to nearly $3.4 billion. Domestic revenue saw a bit of a higher lift than international revenue did (rising 4.2% compared to 1.2%).

John Wren
John Wren
On an earnings call, Omnicom Group CEO John Wren said: "We remain optimistic that the U.S. economy will continue to improve the remainder of the year."

During the call, Mr. Wren skirted a question from an analyst about the impact of the recent Chevy loss on the company, and whether Omnicom has plans to chase new car business. Goodby, Silverstein & Partners was removed from the Commonwealth structure built for General Motors, with all of that business being consolidated with Interpublic Group of Cos.' McCann. Mr. Wren said that Omnicom agency 720 still has some GM business and "for the quarter there wasn't any impact at all" on the company.

Organic growth globally was up 2.9% in the quarter, which CFO Randy Weisenburger said was at the "high end" of Omnicom's expectations. In the U.S., organic growth was up 4.1%.

By discipline, nearly half of Omnicom's revenue in the first quarter came from advertising. CRM was down a bit for the quarter, but still accounted for nearly 35%. PR was up, accounting for almost 10% and health care and other specialty services made up the rest.

During the investor presentation, Mr. Wren called out the company's data business -- a sector that all the ad holding companies are increasingly focusing on. He said that Analect, Omnicom's primary data unit is "aggressively working" with Omnicom agencies to deliver insights and more analysis of marketing campaigns to clients.

By geography, 53% of Omnicom's revenue came from the United States, 16% came from the Euro markets, 9% came from the U.K., and the remainder came from other markets globally. The breakdown underscores that the company will need to focus on pushing further into markets outside of the U.S. and Europe, especially given the strength of Asia and Latin America.

"Today the global economy appears to operating at three speeds", said Mr. Wren, noting that Asia and Latin America are growing with speed, the U.S. is experiencing slow but steady growth and the most challenging region continues to be the Eurozone.

Overall, he said "2013 is off to a good start."

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