Exchange Rates Help Omnicom Boost Earnings

NEW YORK Omnicom Group on Tuesday reported 2 percent gains in net income and diluted earnings per share for the second quarter to $191 million and $1.02, respectively, compared with the same period a year ago. Favorable exchange rates played a key role in helping the holding company improve its numbers.

Omnicom’s global revenue during the quarter surged more than 12 percent to $2.1 billion, with 6.6 percent of that growth attributed to foreign exchange gains.

Overseas revenue during the quarter soared 21 percent to $967.2 million while domestic revenue increased 6 percent to $1.2 billlion.

Acquisitions contributed to 3 percent of the overall revenue increase in the quarter.

For the six months ended June 30, Omnicom net income climbed 1 percent to $319.3 million and earnings per share rose 2 percent to $1.70 a share. Revenue rose 12 percent to $4.1 billion. International revenue jumped 20 percent to $1.8 billion; domestic operations rung up a 7 percent increase to $2.3 billion.

While profits for the New York-based agency holding company for the quarter were in line with Wall Street consensus, analysts such as Merrill Lynch’s Lauren Rich Fine said organic growth of 2.6 percent was slightly better than expected.

Because of the favorable effects of foreign exchange rates, however, Omnicom’s improved performance is not being viewed as an indication of a broader industry recovery.

In a related development, Omnicom has bought Agency.com from Seneca for an undisclosed sum, the company confirmed this morning on a conference call regarding its second quarter earnings.

The acquisition comes two years after Omnicom transferred its i-shop investments, including a 35 percent stake in Agency.com, to Seneca in exchange for preferred stock in the concern. Seneca eventually assumed 100 percent ownership in Agency.com by purchasing their remaining shares and taking the company private.

This story updates an item posted earlier today.