5.7% Organic Q1 Revenue Growth For IPG

Interpublic Group reported 5.7% organic revenue growth for the first quarter with a total revenue gain (inclusive of acquisitions, divestitures and currency fluctuations) of 2.4% to $1.68 billion. The company narrowed its net loss to $1.8 million, versus $20.9 million in the year-ago period. 

IPG’s Q1 organic revenue growth bested both WPP and Omnicom (5.2% and 5.1%, respectively) and was well ahead of Publicis Groupe (1.9%). 

IPG’s operating income totaled $7.8 million in the quarter versus a loss of $11.7 million a year ago. 

IPG Michael Roth stated: “We saw solid contributions to our performance from across our agency portfolio, with particular strength in the U.S. as well as significant growth in Asia and the UK.” 

He added that the company believes that “we remain well positioned to achieve our 2015 targets of 3-4% organic revenue growth and” is close to a full percentage point improvement in operating profit margin.”



Organic revenue growth in the U.S. was 6.1% while international growth was 5.1%. As with other holding companies, IPG saw growth in Continental Europe for the first time in a while with the region up 3.5%. The Asia Pacific region was up 6%.

By region Latin America was the only area to show a decline (-0.7%) which the company attributed primarily to economic issues ongoing in Brazil. IPG has been in the news recently in the country because two agencies, Borghi/Lowe and FCB Brasil, have been ensnared in a bribery scandal there. On a Friday call with investors, Roth said the holding company was cooperating fully with authorities in Brazil and has also reported the developments to the SEC. He said the scandal and the declining results in Brazil were totally unrelated.

"We're disappointed with what happened," Roth said, noting the company took the initiative to investigate and as a result "one or two employees have been dismissed." He added that it's "an isolated case and we don't see a systemic issue." 

Questioned about the ongoing rebate controversy in U.S. Roth said that the company doesn't seek rebates in the region. And in regions where agencies do seek rebates, contracts with clients dictate how the proceeds are dispersed.

Roth also indicated that the company remains convinced for now that it has a marketplace advantage by not being in the business of purchasing and reselling inventory to clients as other holding companies do. (The one exception is barter unit Orion, where it's a commonly accepted practice in the sector.) He said it was an inherent conflict of interest for a company to position itself as an agnostic advisor to clients on how best to optimize media buys on one hand and then sell them inventory on the other. That said, he also indicated the current policy will be under continuous reassessment.

Commenting on the IPG results, Pivotal Research Senior Analyst Brian Wieser said the firm's organic growth was "much better than expected," adding that "although it is difficult to make apples-to-apples comparisons across the industry given emerging differences in business and accounting practices, it seems clear that IPG had the strongest quarter vs. Omnicom, WPP and Publicis, with ongoing traction for most major business units."

This Story has been updated to include analyst reaction and comments by IPG executives on a Friday morning call with investors and analysts.


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