Net Income Falls at Interpublic

Q4, full-year declines come despite revenue gains

Net income fell at Interpublic Group last year—both in the fourth quarter and for the full year—despite revenue gains in each period.

Revenue grew 3 percent in Q4 to $2.12 billion and 2 percent for the year to $7.12 billion, compared to the same periods in 2012. On an organic basis, revenue rose nearly 4 percent in the quarter and about 3 percent for the year.

That said, net income for the year slid to $259.2 million from $435.1 million in '12. And for the quarter, net income fell from $313.3 million in '12 to $193.1 million in 2013.

Some of the decline is attributable to a $61 million restructuring charge in Q4. The economic downturn in Europe also impacted the company's revenue results. The region supplies about 11 percent of IPG's total revenue; in contrast, 56 percent of the company's revenue comes from the U.S.

"Our results in Europe fell short of our expectations, which had a major impact on overall profitability," said Interpublic CEO Michael Roth, in a statement. "We've taken strategic cost reductions targeted at this issue, which are reflected" in the restructuring charge.

Interpublic ended '13 with an operating margin of 8.4 percent—down from 9.8 percent at the end of '12 and well short of the company's goal of a double-digit margin. For Q4, the margin slid from 19.9 percent in '12 to 15.3 percent in '13. This year, IPG aims to increase its margin by 100 basis points.

Today, the company also unveiled a new stock repurchasing program. IPG's board has decided to repurchase up to $300 million in shares of common stock. The program begins immediately and has no time limit.