Net Income Grows Modestly at Omnicom

Gains in Q2, first half come amid low single-digit revenue growth

Omnicom Group achieved modest profits in the second quarter and first half of this year amid low single-digit revenue growth.

For the quarter, net income and revenue grew 2 percent to $289.5 million and $3.63 billion, respectively, Omnicom reported today.

First-half revenue also climbed 2 percent, to $7.03 billion. But net income for the same period inched up just 1.5 percent, to $494.7 million, according to Omnicom.

On an organic basis, revenue rose nearly 3 percent for both the quarter and first six months of the year, compared to the like periods last year.

Geographically, the company's growth rate was slightly better in the U.S. than abroad. Domestically, revenue grew more than 2 percent for the quarter and more than 3 percent in the first half. In each of the same periods, international revenue growth was less than 2 percent.

More than half of Omnicom's revenue comes from the U.S.—around 52 percent, according to a company breakdown. Europe, save for the U.K., supplies more than 15 percent of the total. The U.K. contribution is 9 percent, with the remaining 23 percent coming from the rest of the world.

A look at marketer spending with Omnicom in the second quarter revealed a steep decline in the automotive sector (down 11 percent) and a dip in financial services (down 2 percent). In a conference call with industry analysts, CEO John Wren and CFO Randy Weisenburger attributed the auto falloff to the loss of General Motors' Chevrolet business in the U.S. That account shifted from Omnicom's Goodby, Silverstein & Partners to Interpublic Group's McCann Erickson.

On the plus side, travel and entertainment brands spent nearly 17 percent more than they did in the same quarter of 2012. Other sizeable gains were seen in consumer products (up 7 percent), telecommunications (up nearly 6 percent) and pharmaceuticals/healthcare (up 4 percent).

Responding to questions about the outlook for marketer spending in the second half of 2013, Wren and Weisenburger struck an optimistic note.

"Right now we're in the process of reforecasting for the second half and we're not quite done with that process. But we haven't seen any major swings in attitude from what we've previously forecasted," Wren said.

Weisenburger added that Omnicom is "certainly more confortable with the full year than we were—well, I guess we've always been comfortable with it. But it's certainly encouraging to see how this quarter came out."

Omnicom, parent company to creative agencies like DDB, BBDO and TBWA and media shops such as OMD and PHD, ended the quarter with an operating margin of 14.4 percent, up from 14.2 percent in Q2 2012.