Interpublic Group of Cos.’ Q1 income loss fell by 24% to $45 million versus last year. Revenue growth of 10.3% to $1.5 billion (gained largely on the backs of standout agencies Lowe, Mediabrands and DraftFCB) was cited as the driving factor in the improved footing.
“Our agencies are performing across the board, and we believe there’s great opportunity for our industry to benefit from an increasingly fragmented media landscape,” said CEO Michael Roth. “We also continue to demonstrate expense discipline so as to stay on the path we had defined to significantly increase levels of profitability.”
Emerging from a nine-year haul out of serious financial and operational problems, Interpublic is on track to hit industry-standard profitability soon, Roth said.
While Roth did not provide specific color on performance at McCann Worldgroup, the holding company’s largest and most embattled agency that’s in the midst of reinvention, he did report it has positive growth this quarter. He repeatedly lauded McCann’s ability to retain the $200 million U.S. Army account.
This earnings report did not reflect Universal McCann’s recent loss of North America duties for Microsoft; that loss will appear in second-half earnings. However, recent wins, such as re-signing Sony to a three-year contract and a new assignment with Hasbro, will offset that loss to some extent, Roth said.
Analysts twice remarked on how the No. 4 holding company is outperforming its peers during the earnings call. However, No. 3 Publicis Groupe reported revenue up 10.7%, while No. 2 Omnicom Group reported revenue up 7.9% to $3.15 billion.
Interpublic saw strong growth in international markets. Organic revenue for the quarter grew 8.8% in the U.S. vs. 10.2% internationally. Strongest markets included China, India and Latin America, particularly because of strong agencies in Brazil.
Among clients, Interpublic saw double-digit growth in most sectors, including tech and telecom, automotive and food and beverage, while retail and package goods were flat. Since Walmart is such a sizeable client, the largest global retailer’s repositioning had some effect on sluggish growth for the retail sector, Roth said.
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