Omnicom posts third-quarter organic growth of 11.5%

Omnicom Group posted third-quarter organic revenue growth of 11.5% as it continued a comeback from a COVID-19 contraction. This marked the company’s second consecutive quarter of organic growth since being punched by the pandemic in early 2020. Subscribe to Ad Age now for award-winning news and insight. On a late afternoon earnings call, Chairman-CEO John Wren said he expects full-year 2021 organic growth of “approximately 9%,” which would suggest fourth-quarter organic growth in the range of 5% to 6%. Organic growth is a key financial measure that factors out acquisitions, divestitures and effects of exchange rates. Omnicom third-quarter organic revenue rose across all regions, though the U.S. had the slowest growth. Organic growth came in at 7.7% for the U.S., 20.2% for other North America, 11.4% for the U.K., 14.9% for the rest of Europe, 19.6% for Asia Pacific, 15.9% for Latin America and 24.3% for the Middle East and Africa. Compared to last year’s third quarter, organic growth increased across all of Omnicom's fundamental disciplines: 8.6% for Advertising, 24.3% for CRM Precision Marketing, 18.0% for CRM Commerce and Brand Consulting, 49.9% for CRM Experiential, 8.3% for CRM Execution & Support, 10.5% for Public Relations and 6.6% for Healthcare. Omnicom’s earnings announcement noted: “As the impact of the COVID-19 pandemic on the global economy continues to moderate, we experienced an improvement in our business in the third quarter of 2021 as compared to the third quarter of 2020. The increase in revenue primarily reflects increased client spending in all our disciplines and across all our geographic areas compared to the prior year period.” “We are extremely pleased with the third quarter,” Wren said on the earnings call. Wren noted Omnicom’s recent global wins of luxury brands Chanel and Mercedes-Benz. Chanel this month announced it would shift its global media account to Omnicom Media Group from WPP. Omnicom in September won the consolidated media and creative business for Daimler's Mercedes-Benz. Worldwide revenue rose 7.1% to $3.44 billion in the quarter ended Sept. 30 from the $3.21 billion reported in the same quarter a year ago. Worldwide revenue growth reflected organic growth of 11.5%, the positive effect of foreign currency translation of 1.6% and a decrease in revenue from acquisitions, net of disposition revenue, of 5.9%. The world’s second-largest agency company reported third-quarter net income of $356 million, up from the $313 million posted in the same period a year ago. Diluted earnings per share came in at $1.65, up from $1.45 in the year-ago period. The consensus forecast among analysts had been for revenue of about $3.46 billion and earnings per share of $1.37, according to investor site Seeking Alpha. While Wren said clients are generally optimistic about their business prospects, he noted clients’ concerns about the ability to produce and deliver goods amid stresses in global supply chains and shipping backups at ports. Wren said current supply chain issues are not translating into reduced client spending. “We’re very comfortable that we don’t see any real cutbacks from what we're currently projecting,” he said. Still, given the “great unknown” of supply chain challenges, he noted Omnicom has been somewhat conservative in its forecasts for fourth-quarter project work. The majority of Omnicom’s staff still was working remotely in the third quarter, but Wren said Omnicom continues to look for ways to bring employees back to the office in a safe way. Toward that end, he said, the company is testing a private transportation service for New York-based employees. Phil Angelastro, the company’s executive VP and chief financial officer, noted on the earnings call: “We’re a culture that works best when we’re together. ... We are a culture of collaboration.” Omnicom last month agreed to buy two Germany-based ventures—Oliver Schrott Kommunikation, a PR agency, and Antoni, a digital agency. The company this month bought New York-based Jump 450 Media, a performance marketing agency. Angelastro said Omnicom is in the process of closing on “several acquisitions,” adding that the company continues to scout for more deals in “faster-growth” disciplines. Omnicom is the second of the top agency companies to announce third-quarter results. Publicis Groupe last week raised its forecast for the full year after posting strong results with third-quarter organic growth of 11.2%. Publicis shares last week scored a multi-year high, with shares trading far above their pre-pandemic level. Interpublic Group of Cos. reports third-quarter results on Oct. 21. WPP will give its third-quarter update on Oct. 28. Dentsu Group will announce third-quarter earnings on Nov. 12. Subscribe to Ad Age now for award-winning news and insight. Omnicom announced its results today after the stock market closed. Omnicom shares closed today at $76.47, up 6 cents. Shares fell to $74.01 in after-hours trading. The stock is well below the 52-week high of $86.38 reached last May.

Omnicom posts third-quarter organic growth of 11.5%

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