By William Spain
The economic slowdown, along with currency headwinds, took a big
bite out of Omnicom Group's second-quarter top and bottom lines,
the holding company said Thursday.
Omnicom Group (OMC) earned $233.4 million, or 75 cents a share,
on the period. That is down 24% from $307 million, or 95 cents a
share, in the same quarter of 2008 but a penny a share ahead of the
average estimate of analysts polled by FactSet Research.
Revenue at the advertising and marketing communications services
giant plummeted more than 17% to $2.87 billion, with a roughly 7%
hit on currency and an almost 11% drop on an "organic" basis.
The revenue declines came across geographic areas and all
disciplines. Domestic revenue was off 12.9% to $1.52 billion while
international revenue slumped 22% to $1.35 billion.
And all of its business categories were under pressure from
double-digit declines. Traditional advertising services were down
15.5%, public relations fell 18.7%, specialty services were down
20.1% and customer relationship marketing services slid 18.7%.
"The revenue decline in the second quarter was slightly greater
than we had anticipated with the greatest pressure occurring in
just a few areas," especially automotive, said John Wren, chief
executive, in a conference call with investors.
He noted that there has been "elimination of discretionary
projects and events in individual countries where GDP remains
negative" and "several specialty businesses and areas continued to
decline."
The company has been trimming costs, he continued, and it is
well-positioned for a turnaround.
"I'm encouraged especially by discussions that I've had
primarily in the last six to eight weeks with major global
advertisers and I expect that new business opportunities in the
second half of this year will exceed prior year activity," Wren
said.
With the sharp drops in profit and revenue not unexpected,
investors took the dismal numbers in stride as shares of Omnicom
closed up slightly at $34.51.
-William Spain; 415-439-6400; AskNewswires@dowjones.com
