Omnicom Revs Rocket 10.6% In 2011

John-WrenAd holding company Omnicom Group reported a 10% gain in net income for the fourth quarter of 2011 to nearly $272 million, as well as a 7.4% gain in revenue to $3.85 billion. For the year, net income was up more than 15% to $952.6 million, while revenues climbed 10.6% to almost $13.9 billion.

Organic revenue growth (which excludes acquisitions, sales and currency fluctuations) for both periods was lower: 5.2% in the fourth quarter and 6.1% for the full year. By comparison, Publicis, the other major holding company to report full-year 2011 results so far, said last week it had fourth-quarter organic revenue growth of 2.9% with full-year organic growth of 5.7%.

Commenting on a call with analysts Tuesday morning, Omnicom CEO John Wren characterized the company’s 2011 results as “very strong,” despite the volatile economy, leaving Omnicom “very well positioned for future growth.”

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Wren made a commitment to bring the company’s pre-tax and interest profit margin to 13.4% by the end of 2012, or to 2007 levels, which was just before the major economic turmoil began. That margin climbed to 13.3% in 2011, up from 12.8% in the prior year. 

While the company had a strong year in terms of net new business -- $4.5 billion globally -- cost-cutting last year helped to boost Omnicom’s financials. Personnel severance costs alone totaled $200 million -- about four times the average annual total, said Randall Weisenburger, the company’s CFO.

By category, Wren indicated that the automotive, consumer goods, financial and retail sectors were some of the stronger categories for the year, while healthcare, pharmaceuticals, travel and entertainment were weaker categories in 2011.

Wren characterized 2011 as a watershed year for the industry. “We moved from an era of digital marketing to marketing in a digital world,” he said. “Everything has a digital component now.” 

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