Omnicom: 2012 Revs Up 2.5%, 'Modest Growth' Predicted This Year

by Steve McClellan, Feb 12, 2013, 11:17 AM

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Omnicom Group reported fourth-quarter revenue of nearly $4 billion, up 2.4% with a net income gain of 13% to $307 million. For the full year, 2012 revenues increased 2.5% to $14.2 billion on a net income gain of close to 5% or $1 billion.

Organic growth -- a key performance indicator for the ad industry -- was 4% for full-year 2012, which was in line with previous company guidance, but down from the company’s 6.1% organic growth in 2011.

Fourth-quarter organic growth was 2.7% versus 5.2% for the fourth quarter of 2011. But given the lackluster economic environment and slow recovery in the U.S. and recessionary climate in much of Europe, “we finished 2012 in a very strong position,” Omnicom CEO John Wren told Wall Street analysts on a conference call Tuesday morning.

Wren said he expects “modest global growth” for 2013. How Washington addresses long-term fiscal issues, including the U.S. debt, “will impact growth in the U.S.” Europe will face “slow growth for some time. “ The Asian and Latin American regions will continue to show stronger growth, Wren said.

The company will continue to invest in technology to help clients make smarter ad buys, said Wren. Strict cost management helped Omnicom achieve a pre-recession level profit margin of 13.4% in 2012.

Omnicom CFO Randy Weisenburger said fourth-quarter revenues were “a little better than expected,” aided in part by $1 billion in new business. Wren added that client spending, often hard to predict in Q4, ramped up after the presidential elections. Clients, he said, seemed committed “to spend to increase market share.” That general attitude has continued into the first quarter.

Weisenburger had indicated earlier that he believed the company could achieve organic growth for 2013 of between 2% and 3%. On the analyst call Tuesday he adjusted those numbers slightly, saying that for now, he believes organic growth for the year could be in the 3% to 3.5% range.

This year, he said, “feels” a lot like 2012 in terms of the overall business and economic environment, with the exception of no Olympics. Last year’s London Olympics added about one-half of a percentage point to company revenues, he said.

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