IPG Boasts 8% Rev Growth

Michael-RothThe Interpublic Group of Companies reported nearly 8% revenue growth for full-year 2011 to just over $7 billion, while nearly doubling its net income to almost $552 million. For the fourth quarter, revenues were up 3.4% to nearly $2.1 billion, while profits climbed 25% to more than $278 million.

For both periods, however, organic revenue growth -- which excludes acquisitions, sales and currency fluctuations, and which is a key performance indicator for the industry -- was lower.

IPG said it generated organic revenue growth (ORG) of 6.1% for the full year and 2.8% for the fourth quarter, essentially in line with other ad holding companies that have reported full-year financial results.

Omnicom Group, which reported full-year results nearly two weeks ago, reported the same amount of full-year organic growth at 6.1% and a somewhat higher 5.2% ORG for Q4. Publicis Groupe said that it managed full-year ORG of 5.7% with 2.9% ORG in Q4.

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IPG CEO Michael Roth characterized the agencies' 2011 performance as “strong” and sustainable. But as of now, the company does not believe it will achieve the same kind of organic growth this year as it did in 2011.

On a conference call with analysts Friday morning, Roth said the company currently is targeting 3% organic growth for the full year, while it expects to improve its profit margin by half a percentage point.

Roth said the company is targeting a relatively low ORG level this year, due to the continuing “economic uncertainty at the macro level.”  He noted Continental Europe’s continuing economic woes and said that IPG is not counting on the region rebounding in 2012. It was the poorest-performing geographic sector for the company last year.

Roth also said that IPG will confront “revenue headwinds” in the first half of the year, as it fully absorbs two big client losses from 2011, including S.C. Johnson and Microsoft.

The company will pursue a more aggressive acquisition strategy in 2012, with about $200 million earmarked for purchases as IPG continues to bulk up on digital and high-growth marketing services in the PR, health care and shopper marketing sectors. By comparison, the company spent about $60 million on acquisitions in 2011.

Company CFO Frank Mergenthaler said that both revenue per employee and the company’s 2011 operating profit margin of 9.8% were the best performances for the company in over a decade.

The company also announced a new $300 million stock repurchase program that is effective immediately.

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