Omnicom Posts Best Organic Growth In Almost 3 Years

The failed POG merger may have been a distraction for some Omnicom executives over the past year, but you wouldn’t know it from the company’s second-quarter financial results.

Revenue was up 6.4% to $3.9 billion while organic revenue growth (which excludes the impact of acquisitions, divestitures and currency fluctuations) was up 5.8%. By comparison, Publicis Groupe -- the other POG partner, also reporting today -- posted organic growth in the quarter of just 0.5%. Last week Interpublic reported Q2 organic growth of 4.7%.

Omnicom CEO John Wren told analysts and investors on a Tuesday morning conference call that the second quarter was a “very strong” one for the holding company. “The results speak for themselves,” he said. Net income was up almost 12% to $358.4 million.

Wren said the organic growth performance was the best since the company’s third-quarter performance in 2011. He noted that the company generated $2 billion in new business (annualized billings) during the first half of the year including assignments from Johnson & Johnson, Sony, a number of new pharmaceutical awards and other accounts.

The company resumed its share repurchase program in Q2, buying up $550 million in shares since May.

Wren also cited U.S. performance as a big driver of overall results, noting that the region posted 8.8% organic growth. Media was a big contributor, with search, social and programmatic up sharply. Most of the of BRIC countries turned in double-digit growth while the UK posted mid-single-digit growth. Latin America was up 7.8% while the Asia-Pacific region posted a gain of 5.1%.

The company’s advertising (including media) businesses posted 10.5% organic growth for the quarter, while PR was up more than 4% and CRM was up 1%. The firm’s healthcare offerings were also “very active” during the quarter, Wren said.

The holding company chief said the firm was on track to achieve previously stated guidance of 2014 organic growth of between 4% and 4.5%, while profit margins will remain flat to up slightly.

The company’s trading desk Accuen is gaining traction and added $40 million in revenue during Q2. The trading desk buys time and resells it to clients who participate on an “opt-in” basis, said Wren.

One analyst on the call described Publicis Groupe’s Q2 results as “dire” and asked Wren whether Omnicom had taken share away from its former merger partner during the period. Wren replied that he believed Omnicom took more business away from WPP and IPG.

Noting that new media like social, video display and programmatic will continue to grow sharply,  Wren said he didn’t believe any traditional media would be “eliminated.” It’s about the “breadth of opportunity,” he said. There’s a lot of “chatter” among clients about programmatic and other new media forms “but not a wholesale move,” toward them yet, Wren said. “The trend continues like it has been.”

As for digital, Wren said that “anything that can be will be digital,” which includes “pretty much everything we do.”

For the first half of the year, company revenues were up nearly 5% to $7.4 billon with organic growth of 5.1%. Net profit was up 7% to $586.5 million.

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