Omnicom’s Q4 Net Declines 2%

Merger costs impact profits

Omnicom Group, hit by professional fees related to its proposed merger with Publicis Groupe, said fourth-quarter net income declined 2 percent to $300.5 million from $307.1 million in the same period of 2012.

Because of those expenses, the U.S. holding company took $13.3 million in fourth-quarter, pre-tax charges related to the transaction and $41.4 million for the full year.

Organic growth in the quarter rose 4 percent, while global revenue climbed 2.9 percent to $4.1 billion.

Omnicom chief executive John Wren told investors on an earnings call that he is “both encouraged and cautiously optimistic” about the company’s outlook this year and said he expected a 4 percent increase in 2014 organic growth.

Addressing the Publicis transaction, Wren said anti-trust regulatory approvals have “progressed well,” with China being the only market where the holding companies are still awaiting clearance. Omnicom and Publicis are filing audited 2013 financial statements before tax approvals can be finalized and the companies continue to work on SEC filings in the U.S. and those for the AFM in Europe.

Wren now thinks the deal may not be completed until early in the third quarter, with the complex regulatory process taking longer than expected.

He said in late 2013 that the two companies established integration teams with “approximately 70 workstreams,” but he declined to provide any other details. He stressed the caution Omnicom and Publicis are using in their dealings with one another until the merger is completed, since they are still competitors.

In the fourth quarter, Latin America led Omnicom’s regional growth, with revenue jumping 18 percent; followed by Asia Pacific, which increased 10 percent; North America, 3 percent; Europe, 2.6 percent; and Africa and the Middle East, 1 percent.

For the full year, net income declined to $991.1 million from $998.5 million. Global revenue in 2013 increased 2.6 percent to $14.6 billion.

For all of 2013, Omnicom reported organic growth of 3.5 percent, with the U.S. showing a 3.7 percent increase and in international markets, 3.4 percent.

Omnicom CFO Randy Weisenburger described the fourth-quarter results as “excellent” and a strong finish to the full year. “The business feels better than at the same time last year,” he added.

On Feb. 13, Publicis Groupe is set to report its 2013 fourth-quarter and full-year results.