Omnicom PR revenue up 4.1% in second quarter

Omnicom Group's PR revenue was up 4.1% on an organic basis in the second quarter of this year. For the year to date, PR revenue was up 2.7% organically.

Omnicom CEO John Wren
Omnicom CEO John Wren

NEW YORK: Omnicom Group’s PR revenue was up 4.1% on an organic basis to $357 million in the second quarter of this year, according to results released on Tuesday morning. 

For the year to date, PR revenue was up 2.7% organically to $682.5 million. The holding company owns and operates FleishmanHillard, Ketchum, Porter Novelli, and Marina Maher Communications, among others. 

Ketchum CEO Rob Flaherty said his firm had "another very strong quarter" and hit its goals, but did not provide a specific revenue growth figure.

"I’m liking the trend that we have going on, and the momentum as we move into the second half of the year," he said. The firm also hired 100 staffers in Q2.

New business included the AOR account for Legacy’s Truth campaign. When the firm won the business in May, Ketchum partner and New York office director Mike Doyle said the work will be "career-making for staffers on the account." It also won the Movember Foundation’s UK account.

In late June, Ketchum cut fewer than 20 positions, predominantly in New York and Washington, DC, across staffing levels.

Overall, Omnicom’s revenue increased 5.8% organically in the quarter to $3.9 billion. The company reported domestic revenue of $2.1 billion and international billings of $1.8 billion. Revenue was up 5.1% organically in the first half of the year, compared with the first six months of 2013, to $7.4 billion, including a 6.4% organic revenue increase in North America. 

Operating income in Q2 was up 4.9% to $548.4 million, while operating margin decreased to 14.2% from 14.4% in Q2 2013. Net income was up 12.3% to $325.2 million. 

"Our second-quarter organic growth was very much in line with the sector within Omnicom as reported," said Fleishman CEO Dave Senay, via email. "But our first half was well above what was reported. Our strongest-performing region was North America."

For the first six months of the year, operating income was up 4.1% to $931.1 million, while operating margins were down to 12.6% from 12.7% compared with last year. Net income for the first half of the year was $530.7 million.

"Porter Novelli is tracking ahead of plan in key growth areas, especially health and wellness as well as measurement and analytics," said Karen van Bergen, CEO of the firm. "We expect to see continued organic growth in the second half of the year."

In terms of individual markets, the holding company saw 7.9% Q2 organic growth in North America to $2.2 billion, compared with 2.1% in Europe to $1.1 billion; 5.1% in Asia-Pacific to $401.5 million; 7.8% in Latin America to $112.7 million; and 2% in Africa and the Middle East to $63.1 million.

For the first half, North American revenue improved 6.4% organically to $4.2 billion, while European sales were up 2.2% to $2.1 billion. Revenue in Asia-Pacific jumped 5.4% to $760.5 million, while Latin America was up 7.6% to $203.5 million, and Africa and the Middle East was up 4.2% to $118.8 million.

Broken down by discipline, the holding company’s Q2 advertising revenue was up 10.5% organically to $1.9 billion, while CRM increased 1.1% to $1.3 billion and specialty communications was up 0.2% in the quarter to $271 million.

For the first six months of the year, advertising revenue increased 7.8% organically to $3.6 billion; CRM was up 2.7% to $2.5 billion; and specialty communications increased 2.5% to $523.6 million.

The Q2 results also included $1.8 million in pre-tax charges related to Omnicom’s cancelled merger with Publicis Groupe, which were mostly professional fees, according to the holding company’s earnings statement. The firm also said that its effective tax rate for the period reflected the recognition of income tax benefits of $11.2 million on previously incurred expenses for the merger. The total impact of merger-related costs on net income available to shareholders was $9.2 million in the quarter.

Pre-tax charges for the first six months of the year related to the terminated merger were $8.8 million. For the half-year period, the total impact of merger-related items on net income available to shareholders was $2.6 million, the holding company said in its earnings statement.

Publicis also released second-quarter figures on Tuesday morning. While the Paris-based holding company does not break out PR numbers, overall revenue was up 1.8% organically in the second quarter. CEO Maurice Levy called the results "not satisfactory."

Organic growth represents change in revenue without taking into account the impact of acquisitions or disposals.

This story was updated on July 22 with additional information about merger-related costs and more financial data for the half-year period. It was also updated with quotes from Senay and Flaherty. The story was updated again on July 23 with quotes from van Bergen.

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