Eight years after financial straits forced Interpublic Group to stop paying stock dividends, the company has restored its dividend program in the wake of encouraging results for the fourth quarter of 2010 and full year.
Interpublic last paid a dividend in the fourth quarter of 2002. Bank loans that the company negotiated in early 2003 prohibited IPG from paying dividends, buying back shares and making capital expenditures.
Today, however, IPG said it had reinstated dividends and its first payment—of 6 cents per share—would be issued next month. IPG also said it had begun an initiative to buy back up to $300 million in common stock. The share repurchase program has no expiration date and will begin during the first quarter.
IPG CEO Michael Roth described the two moves as “important milestones” that “signal confidence in the sustainability of our strong competitive performance.”
Also today, IPG reported net income gains for the last quarter of 2010 and full year. For the quarter, net income rose 51 percent to $195 million, from $129.4 million in the same period of 2009. Net income for the year nearly tripled to more than $271 million, from $93.6 million in the year before.
Revenue also grew during those periods. In Q4, revenue climbed 12 percent to $1.8 billion. The gain for the year was a more modest 8 percent, to $6.53 billion. On an organic basis, revenue grew 11 percent for the quarter and 7 percent for the year.
Roth attributed the growth to an “improved economic climate and growing confidence on the part of marketers,” as well as investments in talent. Of course, the baseline numbers from the depth of the recession in 2009 were particularly low.
“It’s clear that marketers are leaning forward and looking to us to help them grow,” Roth told industry analysts during an hour-long call this morning, after IPG reported its latest results. “This gives us greater confidence that they will maintain or increase their levels of spend in 2011,” Roth said.
For this year, Roth projected organic revenue growth in the mid-single digits (between 4 to 5 percent). At the same time, Roth expects to climb back toward a double-digit operating margin (9.5 percent to 10 percent) from 8.4 percent at the end of last year.