Omnicom Profits Flat In First Quarter; Revenue up 12%

Omnicom Group’s revenue rose 12 percent in the first quarter, but its profits were flat, largely because of severance costs in Europe, according to the holding company.

Revenue climbed to $1.9 billion, from $1.7 billion in first-quarter 2002. Net income increased marginally to $128.6 million. First-quarter earnings per share rose a penny to 69 cents.

Total first-quarter U.S. revenue grew 7.6 percent to $1.1 billion. U.S. organic growth was up 4.3 percent to $1.07 billion, buoyed by $33.4 million from acquisitions. International revenue rose 17.9 percent to $838 million. Overseas organic growth was flat, but overall gains came from $19 million in revenue from acquisitions and $107 million in foreign exchange benefits, with the euro and British sterling stronger than the dollar.

There were some indications of industry improvement. Omnicom’s traditional advertising business grew 10.5 percent, specialty communications rose 8.2 percent, and CRM services were up 20.8 percent. Public relations continued to lag, with revenue off 1.1 percent.

“We view Omnicom as the best-managed company in the global advertising space,” wrote Bill Warmington, an analyst at SunTrust Robinson Humphrey, in a research report, “and believe it to be better positioned in the near term to benefit from the initial stages of an improving economy than Interpublic Group of Companies, given Omnicom’s greater percentage of higher growth marketing services revenue and IPG’s considerable company-specific issues.” —NOREEN O’LEARY