Omnicom profits up in Q2 (but growth down from Q1)

The good news from Omnicom is that profits was up 13.1% in its second quarter. The bad news is that performance is not even half as good as it was last quarter. The agency holding giant which includes BBDO, DDB, OMD and PHD reported Q2 net income of $275.1 million, compared to $243.3 million in the […]

The good news from Omnicom is that profits was up 13.1% in its second quarter. The bad news is that performance is not even half as good as it was last quarter.

The agency holding giant which includes BBDO, DDB, OMD and PHD reported Q2 net income of $275.1 million, compared to $243.3 million in the same period in 2010.

“We’re pleased to announce strong operating results despite the challenging worldwide economic backdrop,” Omnicom president-CEO John Wren said on a conference call with analysts this morning.

Worldwide revenue for Omnicom rose 14.7% to $3.5 billion, an increase from the $3 billion it achieved in the year-ago period. Organic revenue was up 7.2% to $218 million.

Overall,  Wren said that by 2012 he expects to have margins reaching levels they were at in 2007, prior to the recession.

Despite Japan’s losses from the fallout of its crisis, the company has high hopes for Asia, especially Greater China, where it introduced a new operations structure to enhance global marketing for Chinese clients, Wren said.

“We just saw a very steady performance in all markets that weren’t under unusual stress like Japan and Greece,” he said. “We’re continuing to execute against strategic objectives of building a presence in rapidly growing markets.”

Though acquisitions were slow to close this quarter, Wren expects them to pick up in the second half of the year, especially in developing markets.

Of the disciplines, advertising led the charge with $1.62 billion in revenue, an 18.5% increase over the same period in 2010. CRM, or customer-relationship marketing, was a close second with $1.25 billion and a 15.1% increase. Public relations achieved 7.1% year-over-year growth to $311.7 million.

Net new-business wins accounted for just more than $1 billion in revenue. Within the disciplines, automotive is experiencing perhaps the most exciting growth, now that Omnicom has “cycled through the loss of Chrysler,” said Wren. Automotive represents 8% of total revenue, compared to 7% in the second quarter last year. Other industries that performed well include financial services, technology and travel and entertainment.

In March, PR firm Brodeur Partners bought back a majority stake from Omnicom, which also houses PR agencies Ketchum, Fleishman-Hillard and Porter Novelli.

To read the original article in Advertising Age, click here.

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