Omnicom Posts 8% Revenue Gain for ’05

NEW YORK Spurred on by a big new-business year, Omnicom Group today reported 2005 net income of more than $790 million on revenue of nearly $10.5 billion. Those figures represent 9 and 8 percent improvements over the company’s performance in 2004.

For the fourth quarter, net income rose 7 percent to $253 million on a 5 percent revenue increase to $2.94 billion, compared to the same period a year ago.

Key wins at Omnicom agencies last year included Bank of America, Sprint Nextel, Comcast, BMW, Levitra and Lowe’s home improvement centers.

Diluted earnings per share for the full year and fourth quarter increased 10 and 12 percent, respectively, to $4.36 and $1.41 per share.

Omnicom CEO John Wren, speaking on a conference call with the media and analysts, said the company won a record $5.5 billion in new business last year.

CFO Randy Weisenburger said, “We’re extremely pleased with our agencies’ ability to gain market share,” during the conference call.

Marketing service accounted for more than 35 percent of Omnicom’s total business last year, with specialty services making up 11 percent and public relations 9 percent.

When asked about the marketing landscape going forward, Wren said, “With the exception of the auto industry, I see a fair amount of bullishness with our clients. We are extremely well positioned in the advertising industries and we think we’ll continue to gain market share in that area.”

He added that most of the company’s acquisition dollars in 2006 would be spent building its Asian operations, in addition to supporting CRM and Internet services.

In terms of global market performances, Wren pointed to Europe, which has been soft in the last 12-16 months, as picking up. “I’m positive for the first time they’re going to start to contribute to our overall growth,” he said. Wren also said Asia continues to expand, while South America and the United States continue to be strong with one exception—the auto industry.

Omnicom’s BBDO in Detroit yesterday cut 200 staffers, or 11 percent of its workforce, because of cutbacks by signature client DaimlerChrysler, sources said [Adweek Online, Feb. 13]. Of the automotive slump and personnel layoffs, Wren said, “We haven’t been asleep at the switch. We haven’t been filling new jobs. A lot of the cuts aren’t real people, they’re open positions [that won’t be filled]. The struggles of the auto industry haven’t surprised us.”

Both Weisenburger and Wren said they didn’t see the Winter Olympics contributing significantly to Q1 growth because events like that and the World Cup later this year are mostly re-allocations of client budgets, not increases.