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(April 24, 2001) -- Omnicom Group reported today that net income for the first quarter rose to $95.3 million from $79.7 million in 2000 and earnings per share rose to 52 cents from 45 cents the same time last year. Management also restated its guidance of 12% to 14% organic revenue growth for the year.

Revenue rose 16% to $1.6 billion from $1.38 billion in the same period in 2000, led by an 18.5% growth in marketing services revenues, which outpaced a 13.2% growth in traditional advertising.

Among marketing services, specialty advertising showed a 21.4% growth rate, thanks to a strong activity in health care advertising, while its CRM unit -- covering direct and promotional marketing -- was up 19.9%

U.S. revenue rose 25% to $896.6 million during the quarter, compared to $717.4 million in 2000, and overseas revenue for the quarter was up 6% to $704.5 million compared to $661.6 million in 2000, a rate of growth cut sharply by a 9% adjustment for foreign exchange rates.

Organic growth in the fist quarter slowed down to 13.8%, from 14.8% the same time last year, which management said was due to a slowdown in account reviews. Omnicom still managed to bring in $1.3 billion in net new business during the quarter, including clients such as Goodyear Tire & Rubber Co. and Dell Computer Corp.

"Coming into the second quarter, we continue to win business, but there appears to be fewer and fewer accounts that are in review," said Chairman-CEO John Wren.

He blamed the slowdown in new business on clients who are mainly concerned with cleaning up their own balance sheets during a tough first quarter. He noted most of the new business came in early in the quarter, with a significant slowdown late in the period, as clients faltered.

"Going through the trauma of changing your marketing or advertising partner is not is not your first priority in this kind of environment," Mr. Wren said. -- Mercedes Cardona

Copyright April 2001, Crain Communications Inc.

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