IPG Posts 5% Growth in 2016, Targets 3%-4% More For This Year

Interpublic Group posted a 3% gain in revenue last year to $7.85 billion and a 34% net income gain to $608.5 million. Fourth-quarter revenue was also up 3% to $2.26 billion, with a 22% jump in net income. The profit picture was boosted by several favorable regulatory and tax rulings, including benefits from a tax audit for several previous years and a refund related to foreign tax credits.

IPG reported 2016 organic revenue growth of 5% and fourth quarter growth of 5.3%.

By comparison, Publicis Groupe earlier this week reported reported 2016 organic growth of 0.7% and an organic revenue decline in the fourth quarter of 2.5%. And Omnicom Group, also reporting earlier this week, posted organic growth of 3.5% for the full year and 3.6% in Q4.



Looking ahead, IPG said it is targeting organic growth of between 3% and 4% this year and intends to boost its operating profit margin by 0.5% to 12.5%.

IPG CEO Michael Roth told analysts on a conference call Friday that the firm is firing on all cylinders: “We grew organically in every region of the world with notably strong performance in the U.S. [4.4%] and with broad participation from across our agencies, disciplines and client sectors.”

The company also posted strong organic growth in the UK (8.5%) and Latin America (12.2%). Continental Europe showed some improvement (5.7%), with Roth noting that the company’s performance there has not yet “fully turned the corner.” The Asia-Pacific region posted growth of 1.7%.

“From a macro standpoint,” said Roth, “2016 was a year of profound geo-political change in key world markets, which has the potential to bring new uncertainties to the business world as we head into the new year.”

The uncertainties bear watching, particularly in the U.S. and the UK, although Roth stressed that to date the firm hasn’t seen any “negative impact” regarding demand for the company’s services. “The tone of the business remains sound,” he said, adding, “New business activity is solid.”

 “Beyond that, generally slow-growth macro conditions in markets such as Brazil, Continental Europe and the Middle East continue to present challenges, which we nonetheless overcame last year.”

While Roth called out strong performances by a number of the company’s agencies, he also stressed the company would continue to invest in data and analytics capabilities, particularly at Mediabrands, “which we believe will become the data stack and platform that will serve all of our agencies and their clients, as we push for even more accountability in our marketing programs.”

Asked about the Department of Justice probe of ad agency commercial production bidding practices (agencies at the four largest holding companies have been subpoenaed) Roth replied IPG is cooperating but at this point sees no need for any changes in its policies. “Triple bidding is our policy,” he said.

IPG also announced Friday a new $300 million share buy-back program and a 20% increase in its quarterly dividend. 

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