Omnicom Group delivered solid third-quarter organic revenue growth across disciplines and regions, and it boosted its organic growth forecast for the year. But Chairman-CEO John Wren voiced caution about the economy, and the company is looking closely at where it could cut costs.

On a late afternoon earnings call, Wren said Omnicom expects full-year 2022 organic growth of 8% to 8.5%. That’s up from the full-year organic growth guidance of 6.5% to 7% that Wren made in July.

Organic growth is a key financial measure that factors out acquisitions, divestitures and effects of exchange rates.

Omnicom anticipates slower growth in the current fourth quarter, with organic growth in the range of 2% to 3.5%, according to Philip Angelastro, executive VP and chief financial officer.

Wren said Omnicom has “a healthy level of caution” amid macro factors including the war in Ukraine, inflation, rising interest rates and continuing global supply-chain disruption.

“We are internally acting as if the markets are going to be extremely difficult,” and Omnicom is looking at operating costs and ways to increase productivity, Wren said. 

At the same time, Wren stressed that he believes Omnicom has a portfolio of services that positions the company well going forward.

In terms of people and payroll, Wren said Omnicom is looking closely "at our processes,” seeking ways to “offshore where it's appropriate” and eyeing automation where it is possible.

Salary and related service costs are Omnicom’s biggest expenses, equal to about half of revenue.

Angelastro said Omnicom is preparing for macro uncertainty “to be ready to manage through any disruptions that might occur.”

He noted Omnicom has some open positions and said some could be filled with "contractors and a flexible workforce rather than with permanent people."

Wren said Omnicom is looking to reduce its real estate costs, noting that some leases will be expiring in 2023 and 2024.

Wren said third-quarter growth was “across our agencies, disciplines, regions and client sectors.”

Organic revenue increased across all of Omnicom’s fundamental disciplines, including 5.9% for Advertising & Media, 16.3% for Precision Marketing, 12.6% for Public Relations, 11.1% for Commerce & Brand Consulting, 5.0% for Healthcare, 3.9% for Execution & Support and 2.3% for Experiential.

Compared to last year’s third quarter, organic revenue rose across all regions. Organic growth came in at 7.6% for the U.S., 7.7% for Other North America, 11.5% for the U.K., 6.0% for the Euro Markets & Other Europe, 4.4% for Asia Pacific, 13.1% for Latin America and 12.2% for the Middle East & Africa.
 
Worldwide revenue in the quarter ended Sept. 30 came in at $3.44 billion, up 0.2% vs. the same quarter a year ago.

That reflected organic growth of 7.5%, the negative effect of foreign currency translation of 6.3% and a decrease in revenue from acquisitions, net of disposition revenue, of 1.0%.

The agency company reported a third-quarter net income of $365 million, up from the $356 million posted in the same period a year ago. Diluted earnings per share came in at $1.77, up from $1.65 in the year-ago period.

The consensus forecast among analysts had been for revenue of $3.34 billion and earnings per share of $1.71, according to investor site Seeking Alpha.

Omnicom is the second of the major agency companies to release third-quarter results.

Publicis Groupe earlier today raised its forecast for the full year after posting third-quarter organic growth of 10.3%.

Interpublic Group of Cos. reports third-quarter results Oct. 21. WPP will give its third-quarter update Oct. 26. Stagwell will release results Nov. 3. Dentsu Group will announce third-quarter earnings Nov. 14. 

Omnicom shares rose 2.6% today to close at $69.28. Omnicom announced its results after the market close, and shares increased 1.8% to $70.52 in after-hours trading.