Interpublic Sees No Revenue Gain Last Year

Holding company blames past account losses

Interpublic Group reported no growth in revenue in the fourth quarter and for all of 2012, blaming the “significant impact” of account losses in U.S. operations in 2011 and 2012.

Net income, meanwhile, rose 21 percent in the quarter but slipped 16 percent for the year.

The parent company of McCann Worldgroup and Draftfcb said it rung up $2.6 bilion in revenue in the fourth quarter, compared to $2.7 billion in the year-earlier period. For the full year, IPG posted revenue of $6.9 billion compared to $7 billion in 2011.

Organic revenue for the quarter and year was flat. Internationally in 2012, organic growth rose 3.8 percent, fueled by growth from existing clients and new business in high-growth markets. In the U.S., IPG posted a decline in organic revenue of 1.8 percent.

“2012 challenged us in terms of growth, due in large part to account losses suffered in 2011, but we demonstrated our ability to control expenses and drive significant value creation through our strong balance sheet and the return of capital to our owners,” IPG CEO Michael Roth said, in a statement. “In 2013, we expect to return to organic revenue growth performance commensurate with our peers. With growth in the 2-3 percent range, an improvement of 50 basis points on this year’s operating margin is an achievable target.”

Net income in Q4 2012 rose 21 percent to $313 million or 68 cents a diluted share, compared to $259 million or 50 cents a diluted share in the same quarter of 2011.

In November, Interpublic sold its remaining stake in Facebook, with an expected pre-tax gain of $94 million, in a transaction that followed the holding company’s August 2011 initial sale of shares in the social media network. Excluding the impact of the latest Facebook transaction, IPG posted 56 cents in diluted earnings per share in the fourth quarter.

For the year, Interpublic reported net income of $435 million, or 94 cents a diluted share, down 16 percent from $521 million, or 99 cents a diluted share. Without the Facebook gains during the fourth quarter of 2012 and the third quarter of 2011, diluted earnings per share were 82 cents in 2012 compared to 76 cents a year earlier.

Because of IPG’s ongoing share repurchase program and the retirement of its 4.25 percent convertible notes, the company’s fully diluted share count for full-year 2012 was reduced 11 percent to about 481 million shares from 540 million shares in 2011. In announcing earnings, IPG said its board authorized an additional $300 million in share repurchases.


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