• by Steve McClellan  @mp_mcclellan, February 10, 2021

Interpublic Group reported an expected 6.1% net revenue dip in the fourth quarter of last year to $2.28 billion with an organic revenue decline of 5.4%. The company cited the “challenging macroeconomic environment” that continues to be buffeted by the pandemic.

Full year net revenue was down 6.5% with an organic decline of 4.8%. The company took restructuring charges totaling $413 million across the year, much of it earmarked to staff reductions and cuts in the company’s real estate footprint.

Company officials said that restructuring efforts will save the company an estimated annual $160 million going forward. It also announced an increase in its dividend today and said it was committed to reinstituting stock buybacks in the future.

During an earnings call Tuesday Philippe Krakowsky, who succeeded Michael Roth as company CEO at the beginning of the year stated, "Our focus remains on mitigating the impact of the health crisis on our clients, our business, and most important, our people. Their achievements have been remarkable, and I want to express our admiration for their resilience, and our appreciation for their ongoing commitment and effort.”

Krakowsky characterized Q4 results as “solid” under challenging circumstances. While the company paid strict attention to costs it also invested in certain areas “to accelerate areas of strongest opportunity and growth. That investment continues to result in differentiated capabilities and forward-looking offerings, which are in demand and driving success in the marketplace.”

Without being specific given the lack of market visibility Krakowsky said the company expects to return to growth in 2021 “consistent with the industry.”

In the U.S., which accounts for 61% of IPG’s business, the organic revenue decline was 1.8%, compared to a 10.5% drop across international markets. Krakowsky termed U.S. performance “remarkably resilient.”

The company’s agencies division (creative, media and specialist digital units) posted a 3.8% organic revenue gain in the fourth quarter, more than off-set by a 15% decline at the Constituency Management Group (recently rebranded to “Dxtra”). The latter was severely impacted by the COVID-related lack of live events and decline in sports marketing projects.

FCB was one of the best performing agency networks, driven to a large degree by its thriving healthcare practice.

Asked about declines across much of Europe which was down 7-plus percent, Krakowski cited “sector mix” as a primary reason, noting for example that the company’s robust healthcare practice has a far greater presence in the U.S. than other regions. The D2C sector, which remains vibrant, is also more widespread in the U.S.

Project work in the fourth quarter also took a big hit, particularly in Europe amid stringent pandemic-related health protocols.