Omnicom profits fall in Q1

28 April 2009

NEW YORK: Omnicom Group, the advertising holding company, posted a 21.2% decline in net income to $164.5 million (€126.3m; £113.1m) in the first quarter on an annual basis, with total revenues also falling by 14% to $2.75 billion over the same period.

Global adspend is expected to contract by 5.9% this year according to WARC's latest Consensus Forecast, while Omnicom lost its position as the world's largest holding group by revenue to WPP last year.

The company has previously outlined its intentions to continue to expand its global operations in the downturn, but also plans to cut some 3,500 jobs.

It reported that US revenues declined by 7.8% in Q1 2009 to a total of $1.53bn, compared with $1.66bn in the year-ago period.

International sales decreased by a more substantial 20.9% to $1.21bn, down from $1.53bn in the opening three months of 2008.

Operating margins also contracted slightly from 11% to 10.3%, while organic revenue slipped by 6.6%.

Its earnings per share reached 53 cents, ahead of analysts' expectations of 44 cents.

Annual returns are expected to be $2.55 per share in 2009 based on 14 forecasters' projections, which would amount to the lowest total since 2006, and would be down from a peak of $3.17 in 2008.

However, John Wren, chief executive of Omnicom, argued that as "the pace of the economic decline finds a bottom, we do believe companies will focus on revenue growth and start investing or reinvesting in their brands."

In particular, he added, stimulus spending "should start to have a positive impact in the fourth quarter of this year and the first half of next year."

Nomura, the securities firm, has also recently reported that Omnicom took the most new advertising business in March among the "big four holding groups", and is ranked second on this measure over 2009 so far.

Data sourced from Omnicom Group; additional content by WARC staff