• by Steve McClellan  @mp_mcclellan, October 28, 2011

The Interpublic Group of Companies posted a fivefold increase in third-quarter net income to $208 million on an 11% revenue gain to $1.73 billion. Over 60% of the net income gain, or about $127 million, came from the sale of a portion of the company’s investment in Facebook. Discounting that windfall, net income was up 90% to $80.7 million.

The company reported third-quarter organic growth, which excludes the effect of acquisitions and divestitures, of 8.7%, the highest among competing ad-holding companies reporting Q3 financial results so far.

WPP, which reported earlier today, posted organic growth in the period of 4.7%. Havas said earlier this week that its third-quarter ORG was up 7.3%, a three-year high. Publicis Groupe recently reported Q3 ORG of 6.4%, while Omnicom posted a 7.2% gain in the metric, viewed as a key performance indicator by the industry.  

For the first nine months of 2011, IPG said organic growth reached 7.5%, also highest among competitors reporting so far. The comparable figure for the others: Publicis (6.9%); Omnicom (6.5%); Havas (6.1%); and WPP (5.6%).

For the first nine months of 2011, revenue was $4.94 billion, up nearly 10% from the $4.50 billion reported for the first nine months of 2010. Net income for the nine-month period totaled $273 million (with the Facebook gain accounting for 46% of the total), compared to $58 million for the same period a year ago.

IPG CEO Michael Roth said the results were “driven by a broad cross-section of our portfolio, including all marketing disciplines, domestically and in the major emerging economies.”

During a conference call with Wall Street analysts and investors, Roth said IPG’s digital operations also made a significant contribution to growth. In particular, he gave shout outs to digital shops RG/A and Huge. By region, he said growth was driven by the U.S., U.K, Latin America and Asia-Pacific.

“We demonstrated effective cost discipline that resulted in high profit conversion and also continued to return capital to our shareholders.”

Although what Roth termed “macro uncertainty” remains, he said IPG’s performance so far this year makes it likely that it will exceed targets of 4% to 5% organic revenue growth and an operating margin of 9.5% or better.

Despite the economic uncertainty, Roth said the “tone of business remains solid” in the fourth quarter. “We’re seeing little in the way of pullbacks,” from clients, he said.

By category, Roth said automotive, financial companies and the retail sector “remained solid.” Packaged-goods, technology and telecommunications, he added, were somewhat softer.

Total operating expenses for the first nine months were up 8.3%, including a nearly 10% increase in salaries and related expenses. The company shelled out $64 million in severance costs so far this year, mostly related to layoffs after losing big pieces of client business, including the global S.C. Johnson account, Microsoft in North America and Chevrolet in the U.S.  

But the company is also making some progress in replacing those account losses, Roth said -- noting, for example, that digital shop MRM gained a new assignment from General Motors. There have been other wins that clients refuse to publicize, he said. And while the company is gaining ground, he acknowledged that for the year it has not yet won enough new business to make up for departed accounts.