Interpublic Operating Income Increases Despite Headwinds in the U.S.
October 22 2019 - 12:38PM
Dow Jones News
By Nat Ives
Interpublic Group of Cos. posted a higher third-quarter profit,
even as account losses late last year weighed on sales in the
U.S.
The advertising giant said operating income was $280.3 million
in the period, an increase of 7.1% from the equivalent period a
year earlier, helped by growth in international markets. Earnings
per share of $0.49 slightly beat analysts' average forecast of
$0.47, according to FactSet.
Total third-quarter revenue was $2.4 billion, up 6.1%. But in
the U.S., organic net revenue -- the company's preferred sales
measure, which strips out currency effects and acquisitions -- fell
0.6%.
New business wins this year should help restore growth in the
U.S., Interpublic's largest market, Chief Executive Michael Roth
said during a call to discuss the results with analysts, citing new
clients such as Levi Strauss & Co., Humana Inc., TaxAct
Holdings Inc., Airbnb Inc. and Slack Technologies Inc.
"The other reality of our business these days is that you don't
have these big clients," Mr. Roth said. "It's more, it's a bunch of
doubles and singles as opposed to home runs. But we're doing a
pretty good job at that, which is why we're net new business
positive and a fair amount of that is in the U.S."
Interpublic, which owns agency networks including McCann
Worldgroup, MullenLowe Group and IPG Mediabrands, reported an
overall 1.4% increase in third-quarter organic net revenue.
International markets delivered organic net revenue growth of
4.5%, driven by Latin America, continental Europe and Canada.
Growth slowed in the U.K., Interpublic said.
Shares of Interpublic were up around 2.2% at $21.25 each in
late-morning trade.
Like other ad-agency holding companies, Interpublic is
contending with its clients' changing needs. Traditional
advertising has become less efficient, while growing fields such as
data-driven marketing demand new skill sets and resources.
To help answer those challenges, Interpublic last fall acquired
Acxiom Corp.'s Marketing Solutions unit, which specializes in
housing and managing consumer data, for $2.3 billion. Last month,
Interpublic promoted Philippe Krakowsky, an executive closely
involved with that deal, to the newly created post of chief
operating officer, putting him in line to eventually succeed Mr.
Roth.
Analysts are eager to understand just how much the Acxiom deal
and other sizable acquisitions are helping big ad companies.
Mr. Roth said on the call that Axciom is meeting its
expectations, benefiting growth and margins. "Acxiom has been part
of a number of our new business wins and frankly, working with
existing clients and adding value to our existing clients," he
said.
Rival company Publicis Groupe bought Alliance Data Systems
Corp.'s Epsilon marketing-services business for a net purchase
price of $3.95 billion in July.
Publicis recently revised its 2019 guidance downward for the
second time, citing cuts from some U.S. advertiser clients, soft
performance by its media agencies and a continuing effort to
reorganize digital agency Publicis Sapient to better compete for
broader business projects.
Interpublic on Tuesday confirmed its full-year target of organic
growth at the high end of 2% to 3%.
Write to Nat Ives at nat.ives@wsj.com
(END) Dow Jones Newswires
October 22, 2019 12:23 ET (16:23 GMT)
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