Omnicom Edges Up 2% in Q2

30 July 2003

Omnicom Group, currently the globe’s largest agency holding company reported Tuesday a marginal 1.8% increase in second quarter net income to $190.7 million (€166.72m; £117.49m), or $1.02 a share, for the quarter to June 30. The effort compares year-on-year with $187.3 million ($1 a share).

Worldwide revenue rose 12% from $1.92bn to $2.15 billion. U.S. revenue rose 5.8% to about $1.18 billion, and international revenue increased 21% to $967.2 million, reported cfo Randall Weisenburger in a conference call to investors and analysts.

The lion’s share of the revenue growth came not from increases in client spend but positive foreign currency conversions. However, organic revenues, a key barometer that excludes acquisitions, grew 2.6%.

Operating margin, an important measure of underlying profitability, continued to slip to 15.7% in the second quarter from 17.2% in the year-earlier period.

Waffled Weisenburger: “Margins started to slip a little bit last year in the second half. I think we will have a very substantial reduction of any decline, let’s put it that way. Whether we get back quite to last year’s levels, I’m not necessarily predicting that yet.”

And new business prospects? Weisenburger suddenly got positive. “We are starting to see a pickup in the number of requests for proposals, number of new-business opportunities that are coming in around the world. Our win-rate percentage is actually up very significantly over the last couple of years.”

Observed Merrill Lynch ad industry haruspex Lauren Rich Fine (who rates Omnicom as a ‘buy’ stock): “They were really trying to be as upbeat about certain things as they could. But they are also pretty honest. The recovery that we're getting – there is no big surge in momentum that anybody should expect there.”

Data sourced from: The Wall Street Journal Online; additional content by WARC staff