Aegis Group announced organic growth of 11.2% in the third quarter, boosted by a strong performance in North America, where new business wins spurred double-digit revenue growth for the first nine months of 2011. Total revenue for the group was up 26.1% in the third quarter and 20.3% for the first nine months of the year.
Aegis' rapid growth--far ahead of the other holding companies Omnicom Group, WPP Group, Interpublic, Publicis Groupe and Havas that have reported earnings in the last couple weeks -- excludes figures from Synovate, the market research arm sold to French group Ipsos for $840 million last month.
Since the sale of Synovate, Aegis Group, whose network includes Carat, Vizeum, Isobar and Posterscope, has become exclusively a media and digital communications network. Aegis CEO Jerry Buhlmann said during a conference call this morning that this focus is "a positive differentiator" for the group.
Aegis reported net new business wins of $2.4 billion for the first nine months of the year, including $400 million in the third quarter. Most wins were local and national, but there were international assignments from marketers including Diageo, Disney, Pernod Ricard, Expedia and Procter & Gamble.
Aegis didn't break out results by region, but said Northern Europe was strong in the third quarter, and even debt-ridden southern Europe was described as "relatively good." Most of Western Europe, the group said, "delivered strong performances" despite difficult market conditions, with only France described as "challenging."
Businesses in the faster-growing regions, including China, Russia and Brazil, "performed well," according to the company.
Australia showed double-digit growth, following the acquisition of the country's biggest communications group, Mitchell Communications, for $350 million in November 2010.
On Nov. 2, Aegis will return $320 million of the Synovate proceeds to shareholders. Mr. Buhlmann said that the rest of the money from the Synovate deal will be spent on acquisitions "to accelerate our strategy by providing scale, in-fill and innovation, with a specific emphasis on faster-growing regions, North America, and on digital businesses."
The group has spent around $110 million on acquisitions this year, and Nomura estimates that Aegis has another $350 million to $500 million to spend.
Aegis Group's results beat analysts' forecasts. Nomura, which had expected 7.8% growth, issued a note confirming Aegis Group's "buy" rating. Citi Analysts also rated Aegis "buy," saying, "Although it trades at a premium to peers we believe it is justified by the quality of the assets, balance sheet strength, solid business momentum and cost control and the M&A potential."
Mr. Buhlmann said in a statement, "We continue to focus on improving our efficiency and on targeting acquisitions in media and digital that extend our products and services and position the business in key geographies. In addition, we have completed the disposal of Synovate -- this transformational deal makes Aegis a stronger and better-placed business than ever before, able to capitalize on the opportunities ahead."