Friday, 20 February 2015 00:00
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Reuters: Omnicom Group Inc, the No. 1 U.S. advertising company, warned that a strong dollar would hit revenue this year and issued a cautious forecast for organic growth.
Omnicom, home to advertising agencies BBDO Worldwide, DDB Worldwide and TBWA\Worldwide, gets a little less than half of its revenue from outside the United States.
The dollar gained nearly 13% against a basket of major currencies in 2014.
“The significant change ... resulted in a 3.1% reduction in our revenue in the fourth quarter and will impact our reported results in 2015,” Chief Executive John Wren said on a call with analysts on Tuesday.
Chief Financial Officer Philip Angelastro said if currency rates stayed around current levels, revenue would be impacted by about 5.5% in the current quarter and about 5% for the year.
A rising dollar could also hurt Omnicom’s margins, Wedbush Securities Inc analysts James Dix said.
Omnicom, whose clients include Apple Inc, McDonald’s Corp and Adidas AG, forecast organic revenue growth of about 3.5% for 2015, slowing from 5.7% last year.
The company reported better-than-expected revenue and profit for the holiday shopping quarter, mainly due to spending by makers of consumer products in the United States and Britain.
Organic revenue increased 5.9% from a year earlier. Total revenue increased 3.4% to $4.195 billion, as U.S. revenue jumped 8.8% to $2.24 billion.
Net income available for common shareholders rose to $323.9 million, or $1.30 per share, from $293.5 million, or $1.13 per share in the same quarter of 2013. Analysts on average had expected earnings of $1.26 per share on revenue of $4.15 billion, according to Thomson Reuters I/B/E/S.
Omnicom and rival Publicis Groupe SA have been exploring acquisitions in digital and social media to help fend off growing competition from Facebook Inc, Twitter Inc and Google Inc.
