Interpublic's CMG unit sees 3.7% revenue increase in Q3

The group that contains the bulk of the holding company's PR firms reported organic revenue increases for both the third quarter and the first nine months of the year.

Interpublic Group CEO Michael Roth
Interpublic Group CEO Michael Roth

NEW YORK: Interpublic Group’s Constituency Management Group, the unit that contains most of its PR firms, achieved a 3.7% organic revenue increase in the third quarter, compared with the year prior, to $381.4 million.

In the first nine months of the year, CMG’s organic revenue was up 2.5% to nearly $1.1 billion.

However, when reported on a total basis, the unit’s revenue decreased 0.1% in Q3 and dropped 0.3% in the first three quarters of 2015, compared with the year prior.

Organic revenue growth does not take into account the impact of takeovers, acquisitions, or disposals.

CMG contains the lion’s share of Interpublic’s PR firms, such as Weber Shandwick and Golin, as well as marketing agencies such as Jack Morton, FutureBrand, and Octagon.

Interpublic CEO Michael Roth credited both Weber and Golin on Wednesday morning’s earnings call, saying they "continue to gain market share, driven by their top clients."

"Beyond digital, where both firms have been at the forefront of their discipline, they are also moving into content marketing and upstream to more strategic and integrated opportunities," he said.

Andy Polansky, Weber CEO, said all PR agencies within CMG performed well in Q3. He explained that the difference between the organic and as-reported growth came from the "gross effect of foreign exchange."

"Weber Shandwick and Golin both registered double-digit organic growth in the quarter, and all of our agencies continue to build their creative and digital capabilities," he added.

On an as-reported basis, which includes the impact of currency and acquisitions, CMG’s PR group achieved growth in the mid-single-digit range, Polansky noted. For the year to date, the PR group was up "nearly double-digits" on an organic basis and saw mid-single-digit growth on an as-reported basis.

Weber was up double digits organically for both the quarter and the year to date, he added, performing well in both China and Brazil despite challenging environments. The firm is also planning to expand its footprint in Latin America after opening an office in Mexico this past quarter.

For the holding company as a whole, revenue was up 7.1% in the third quarter on an organic basis to nearly $1.9 billion, and it increased 6.5% in the first nine months of the year to $5.4 billion, compared with the prior year.

Its operating margin was 10.3%, and operating income was up 12% to $192 million in the third quarter. Net income was $78 million, down nearly 16% from the prior year, in the period.

Taken on an organic basis, Interpublic’s revenue was up across its international regions in the third quarter. Organic revenue was up 7.1% in the US, 5.2% in the UK, and 7.2% in Asia-Pacific. Revenue in Latin America increased 14.4% in the period, while it was flat in continental Europe, up 0.2%. All other markets saw a 13.5% organic revenue increase in the quarter. 

This story was updated on October 21 with comments made during the earnings call and from Polansky.

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