IPG Posts 6.7% Organic Growth In Q2, Raises 2015 Growth Target

Interpublic Group’s second-quarter revenue rose 1.3% to nearly $1.9 billion versus the prior year. Foreign exchange rates impacted revenue growth by negative 5.7%, according to the company. Net income rose 22% to $121.2 million.

Organic revenue growth for the period was 6.7% while first half organic growth was 6.2%. By comparison, Omnicom reported second quarter organic growth of 5.3% and 5.2% for the first six months.

For the first half of the year, IPG posted revenue of nearly $3.6 billion, up about 2% with net income up 52% to $119.4 million.

The first half results were strong enough that the company has raised its organic growth target for the full-year 2015 from 3%-4% to between 4% and 5%.

For Q2, IPG post organic growth in the U.S. of 7.7% while the APAC region posted 11.8% growth and the UK 7.9%.

“We are pleased to report another strong quarter of strong organic revenue as well as profit growth,” said IPG CEO Michael Roth during a conference call with analysts and investors. “We saw positive contributions to our top-line performance from a broad range of our creative, marketing services and media offerings.” 

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That said, the company does have some concerns about several geographic regions including Brazil, Europe (despite some improvement) and China. As to Europe, Roth said, "we remain cautious in light of political and economic uncertainty in the region."

IPG's results in Latin America will likely be flat for the year growth-wise with a healthy business environment in both Mexico and Argentina off-setting issues in Brazil.  On the latter, Roth said the nation, which had been strong until recently has "seen a meaningful slowdown," that will hopefully improve as Brazil prepares to host the 2016 Summer Olympics.

"And we will continue to monitor the state of the Chinese economy and adjust our business there accordingly," Roth said.

Roth, also downplayed the notion that rebates and transparency were at the heart of the ongoing media review trend. He said the spate of reviews is more about clients making sure they have the best tools and resources and people in place to optimize their media spending given all the changes in the media landscape. Omnicom CEO John Wren made similar statements Tuesday during an analyst call on Tuesday. 

Roth made a point of reiterating that IPG is standing by its policy for now of not buying inventory for resale to clients (outside of it's corporate trade business where it's common practice) as some other holding companies do including WPP and Omnicom. And while Roth said clients tell him they like the approach, he also acknowledged that competitors seemed to have some success being in the resale business.

He added that he couldn't name an account that was won because of the IPG policy. The summer's review activity may be telling in that regard, he said. If it turns out there's no real advantage to the company or that clients signal they don't care as long as their goals are achieved, the company's policy could change. "It's something to consider if it doesn't pay in the marketplace," he said.


This story has been updated with additional comments from an IPG conference call with analysts and investors.

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