Omnicom issued an update on the impact of the pandemic today quoting CEO John Wren stating: “While it is too early to predict the full impact of the pandemic on our business, we are confident that Omnicom has the expertise and resources necessary to weather this difficult period."
In so many words, the update basically told company followers to forget about previous performance guidance that was made pre-pandemic. For now, all bets are off and the crisis currently makes it hard to provide an outlook on 2020 company performance -- which, of course, is true for almost every company in business today.
In early February, the company issued guidance that 2020 results would likely be in line with 2019’s results, including organic revenue growth of between 2% and 3%. But as we all know, a lot has changed since then.
But Omnicom does appear to have a formidable war chest, including cash and cash equivalents of $4.3 billion. It also has a $2.5 billion line of credit and access to the capital markets that provide additional liquidity if necessary.
That said, it is expecting to take a hit to cash flow from operations as a result of the health crisis as clients reassess 2020 marketing plans.
“Clients may reduce their demand for our services [that] could result in a reduction in our revenue, which would adversely affect our operations,” per the update. There have been numerous reports about campaigns already cut across the industry.
“We have a diversified portfolio of businesses, geographies and clients, some of which will be impacted more significantly than others.”
Again, this is certainly true of the other holding companies as well as many other firms in business today.
Omnicom’s stock was up over 6% in mid-afternoon trading today, in line with the rise of the Dow Jones Industrial Average.
Investors were reportedly upbeat that Congress moved closer to a $2 trillion aid deal to alleviate some of the pain inflicted by the pandemic.