Omnicom Profit Rose 4.4% in 2010 on Robust Fourth Quarter

CEO Wren Says Outlook 'Remains Positive but Cautious'

By Published on .

NEW YORK (AdAge.com) -- Omnicom Group increased profit 4.4% to $827.7 million in 2010 compared with the prior year, largely thanks to a stronger than expected fourth quarter. Annual revenue was up 7% to $12.5 billion.

John Wren
John Wren

"Looking forward, our outlook remains positive but cautious," Omnicom CEO John Wren said during the company's earnings call. "The midterm elections have singled a renewed focus on fiscal restraint and a reduction in the level of antique business rhetoric from Washington. On the other hand, unemployment and housing still represents a drag on potential growth."

However, Omnicom, which includes agencies such as DDB Worldwide, BBDO, OMD and PHD, does expect growth to return to normal levels this year, he added. Beating even internal expectations, revenue for the fourth quarter was up 9.8% from the prior period to $3.8 billion, with net income up 7.4% to $246.5 million.

While the second-largest holding company lost Chrysler, one of its biggest accounts, at the start of the year, Omnicom was able to rebound thanks to such big wins as Johnson & Johnson baby products, GlaxoSmithKline, Bristol Meyers Squibb, Gap and additional Chevy business. In fourth quarter alone, Omnicom generated more than $2.1 billion in new business, and organic growth was up 10%.

Publicis Groupe, the only other holding company to have reported annual earnings at this point, also posted strong results driven by a an "exceptional" fourth quarter in the U.S.

Outside of the U.S., Omnicom saw "significant double-digit" organic revenue growth in Asia. South America also performed well, while Europe is still in the midst of a turnaround.

In the next week, Mr. Wren said the company will be announcing strategic partnerships with Microsoft and Yahoo, in step with Omnicom's Google deal from the third quarter. The partnership meant more competitive rates in Google buys for Omnicom clients, in exchange for research and analytics.

Mr. Wren also said Omnicom will continue the house-cleaning of 2010 that reorganized or disposed of underperforming businesses throughout the first half of this year.

Most Popular