Omnicom says organic revenue to grow faster than expected
Tuesday, 28 October 2014 01:14
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Reuters: Omnicom Group Inc said it was on track to exceed its full-year organic revenue growth target, thanks to increased advertising by U.S. businesses.
Shares of Omnicom, the No. 1 U.S. advertising company, rose as much as 3.7% after it reported quarterly revenue and profit above analysts’ average estimates.
“Investors have been worried about an advertising slowdown globally and these numbers suggest that this is not happening,” Evercore Partners analyst Douglas Arthur said.
Omnicom, whose $35 billion merger with France’s Publicis Groupe SA was called off in May, forecast full-year organic revenue growth of around 4% in February.
Omnicom, owner of agencies such as BBDO Worldwide, TBWA Worldwide and Goodby, Silverstein & Partners, reported organic revenue growth of 6.5% in the third quarter ended September.
U.S. ad spending has been gaining momentum as consumer goods companies try to encourage reluctant consumers, suffering from stagnant wages, to crack open their wallets.
Omnicom’s clients include Apple Inc, McDonald’s Corp and Adidas AG.
WPP Plc, the world’s largest advertising company, said in August it benefited from strong U.S. demand for digital advertising.
Omnicom’s strong performance contrasts with that of Publicis, which warned in July that it would be “very difficult” to meet its sales growth target this year.
Omnicom Chief Executive John Wren, however, expressed caution about the international markets.
“We don’t have much hope for real economic growth in the euro for next year...,” Wren said in a post-earnings call.
Omnicom’s total revenue rose 7.4% to $3.75 billion in the quarter. Ad revenue rose 12.5%.
Revenue from the United States, which accounts for two-thirds of total revenue, rose 10%. International revenue increased 4.7%.
Net income available for common shareholders rose to $239.5 million, or 95 cents per share, from $191.2 million, or 74 cents per share, a year earlier.
Analysts on average had expected an adjusted profit of 90 cents per share on revenue of $3.68 billion, according to Thomson Reuters I/B/E/S.
