Interpublic Group reported a slight revenue gain for the third quarter — 1.3% to $1.87 billion — due, in large part ,to the strengthening dollar in international markets. Profits were also affected by a $38 million loss on sales of non-strategic assets resulting in a 16% net profit decline to $74.9 million.
The exchange rate impact was also a big factor in competitor Omnicom’s reported revenue decline for the quarter, he group reported yesterday. But like Omnicom, IPG show strong organic revenue growth — which excludes currently fluctuations, acquisitions and asset sales — for the quarter: 7.1% and 6.5% for the first nine months of the year.
By comparison, Omnicom posted 6.1% organic growth for Q3 and 5.5% growth for the first nine months.
IPG reported Q3 operating margin of 10.3%, a full percentage point ahead of the margin achieved a year ago. Operating income was up 12% to nearly $192 million. For the nine months, operating income was up 17%. Like Omnicom, IPG’s nine month revenue total was suppressed by the strong U.S. dollar oversees.
“We are pleased to continue reporting strong results in our organic revenue growth and margin progress,” said Michael Roth, CEO IPG.
Roth said the company is now on track to achieve 5% organic growth for the year, higher than the company’s previous projection of 4.5% as well as a full percentage point improvement in operating margin.
On a call with analysts Wednesday morning, Roth said the company was running well on all cylinders. Third-quarter contributions, he said “came from across the portfolio – in terms of agencies, geography and client categories, all fueled by the outstanding creativity, insights and digital capabilities that we have throughout Interpublic.”
Roth gave shout outs to a number of IPG shops, including UM for its recent big media account wins of Coca-Cola, J&J, CVS and McCormick. (The last won in conjunction with sibling shop R/GA.)
The company is participating in several additional reviews that haven’t wrapped up. The company, he said, is “net new business positive” so far this year. It will likely head into 2016 with a “tail wind” from new business gains.
Roth acknowledged that clients generally are seeking and getting lower fees in reviews. But that’s not the only driver, he said, stressing that clients want to assure themselves they’re getting “best in class” services. Increasingly, he added, clients recognize that “their approach isn’t necessarily the right approach,” and are willing to adopt new models—even when offered by incumbents.
The company’s U.S. operations posted a strong 7.1% organic growth rate for the quarter, while the UK reported growth of 5.2%.
Despite the ongoing turmoil with the Brazilian economy, the company achieved 14.4% organic growth in Latin America.