NEW YORK Interpublic Group today reported net income of about $88 million in the second quarter of 2008, down markedly from $121.5 million in the same period last year.
IPG attributed the falloff in profit to a tax expense of about $79 million in Q2, compared to an $11.4 million tax benefit in Q2 2007.
Through the first six months of the year, however, IPG recorded net income of $18.2 million -- a significant upward swing from the net loss of $2.7 million the holding company weathered in the first half of 2007.
Revenue for both the quarter and first half increased to $1.84 billion (up 11 percent) and $3.32 billion (up 10 percent), respectively. And organic revenue -- which excludes the impact of currency exchange rates and acquisitions -- rose about 6 percent for both periods, IPG said.
IPG CEO Michael Roth described the second-quarter performance as "strong," adding "all of our major operating units are showing improvement in their financial results thus far this year." IPG's global agencies include McCann Erickson, DraftFCB, Universal McCann and Lowe.
Roth's enthusiasm, however, was tempered by concerns about the downturn in the economy. Just two weeks ago, DraftFCB in New York laid off some 47 employees or 2 percent of its staff to compensate for "shifts in clients spending," including those spending less or shifting dollars out of media that the agency specializes in.
During an hour-long conference call about the results, Roth reminded industry analysts, "Performance during a turnaround is not linear, and [we] warn you against projecting future results based on a given quarter. This is especially true in light of the economic uncertainty that we are all seeing out there."
He added that IPG is "approaching the back half of the year conservatively and will proactively manage costs to achieve our margin targets."
Previously, the No. 3 advertising holding company vowed to achieve an 8.5 percent to 9 percent operating margin by year's end -- down from an earlier double-digit margin goal.
Also during the call, Roth pointed to two recent agency deals as the types of strategic transactions that the company will continue to make. In one, IPG increased its stake in the Middle East Communications Network, moving from minority to majority ownership. The network, which IPG has been affiliated with for decades, has more than 60 offices in 14 countries in the Middle East and North Africa.
In addition, IPG has taken a 51 percent stake in Huge, a digital agency with offices in New York's Brooklyn borough, Los Angeles, Atlanta and London. Founded in 1999, the shop has worked for the likes of JetBlue, Ikea, Nokia, AOL, British Airways, Scholastic and Warner Music Group.
"We see significant opportunities for Huge to partner with our agencies, expand its geographic footprint and deliver their unique processes and e-commerce platforms to many of our clients," Roth said.
Typically, deals in which IPG takes a majority stake increase to 100 percent within five years. The holding company was expected to formally announce the deal later this morning.