By Nathalie Tadena
Omnicom Group Inc. reported underlying revenue growth across its
geographic markets that exceeded analysts' expectations, though
foreign-currency fluctuations continued to weigh on overall
results.
The owner of agencies such as BBDO, DDB and TBWA said organic
revenue--which strips out foreign-exchange fluctuations,
acquisitions and dispositions--rose 5.1% for the quarter that ended
in March. That topped the 4.3% growth estimated by analysts on
average, according to John Janedis, an analyst at Jefferies
LLC.
North America, which represents 60% of Omnicom's business,
posted organic revenue growth of 4.8% for the first quarter, driven
by brand advertising and media operations. Omnicom said its
European markets also showed signs of stability in the latest
period.
"With the increasing complexity of the marketing landscape, our
clients demand for our services is only increasing," Chief
Executive John Wren said on an earnings call with analysts
Tuesday.
Omnicom, the second-largest ad holding company in the world, has
been building up its digital capabilities to keep up with new
technologies and changing media-consumption habits that are rapidly
transforming the industry. Like the other major advertising
companies, Omnicom faces increasing competition from a new crop of
technology, digital and data-analytics specialists who claim they
can automate some of the tasks that agency employees have long
handled. Since walking away from its proposed $35 billion merger
with French rival Publicis last year, Omnicom has continued to post
solid organic growth rates.
Overall, Omnicom's first-quarter net income rose 1.8% to $209.1
million, or 83 cents a share, while revenue slipped 0.9% to $3.47
billion. Analysts were looking for profit of 82 cents a share and
revenue of $3.5 billion.
Domestic revenue increased 4.6% while international revenue fell
7.3%. Foreign-exchange rates reduced revenue by 6.4% in the latest
period.
"They're off to a good start and even though FX and currency is
a headwind for them. If you look at the underlying growth of the
business, it was very healthy," said Edward Jones analyst Robin
Diedrich.
Given the foreign-currency fluctuations, Mr. Wren said the
company continues to project revenue growth of 3.5% for the year.
The company said it isn't ready to forecast margins for the year,
but aims to keep its second-quarter margins consistent with the
year-before period.
Lisa Beilfuss contributed to this article.
Write to Nathalie Tadena at nathalie.tadena@wsj.com
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