Omnicom Revenue Rises in Third Quarter, Net Income Jumps

Agency Giant Reports Bottom Line Increases by Double-Digit

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Omnicom CEO John Wren
Omnicom CEO John Wren
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Omnicom Group said Tuesday morning that its third-quarter revenue increased 7.4% from the same period last year, to $3.75 billion, as the advertising holding company reported its financial results for the first time with new CFO Philip Angelastro. Net income jumped 24.4% to $243.8 million.

The results were similar to those of the second quarter, when the agency holding company reported a 6.4% increase in revenue and a 12.3% boost in net income.

Omnicom owns agencies including BBDO, TBWA/Chiat/Day, Omnicom Media Group and FleishmanHillard. It is the second largest agency holding company by revenue, following WPP.

Mr. Angelastro emphasized "excellent" performance across the media business, especially in the U.S., driven largely by new business wins and continued development of new media offerings.

CEO John Wren said that programmatic buying, access to data and new opportunities to more precisely target customers through digital media channels is having a notable impact on both clients and growth at Omnicom.

Mr. Wren said that 1.5% of total organic growth was due to the company's programmatic buying business, which is included in the media operations. However, he cautioned analysts to expect programmatic buying to be less than 2% of Omnicom's revenue this year. "While the area is relatively new and presents good opportunity for growth, and were comfortable with our position and investments, it's still small today."

Domestic revenue in the third quarter increased 10% to $2 billion, while international revenue

increased 4.7% to $1.8 billion, the company said. Across regional markets, organic revenue -- a measure of continuing operations that excludes factors such as acquisitions -- increased 8.9% in North America, 2.2% in Europe, 4.4% in Asia Pacific, 2.5% in Latin America and 18.1% in Africa and the Middle East.

Across disciplines, revenue from advertising increased 12.5%, customer-relationship management grew 1% and public relations rose 2.5%. Specialty communications decreased 0.1%.

The earnings release comes nearly six months after the proposed merger of equals between Omnicom and French holding company rival Publicis Groupe fell apart and one month since longtime CFO Randall Weisenburger announced his plan to leave the company and return to private equity. "At Omnicom, we place an emphasis on succession management planning," said Mr. Wren. "For several years Phil has been designated as Randy's successor."

Year-to-date 2014 results include $8.8 million of pre-tax charges in connection with the proposed merger, primarily comprising professional fees, the company said.

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