NEW YORK: The 3% organic revenue growth that Interpublic Group hoped for in 2020 may not be doable because of the coronavirus pandemic, the holding company said on Thursday morning.
The COVID-19 pandemic has created “significant macroeconomic uncertainty,” the company said in a statement withdrawing financial performance targets for this year. IPG projected in February that organic revenue growth would be 3% and EBITA margin would increase an additional 20 basis points in 2020. It also said last month that it is increasing its dividend, focusing on reducing debt and planning to return to share buybacks.
However, Interpublic chairman and CEO Michael Roth said in Thursday’s statement that “visibility into marketing and media spend is extremely challenging.” He added that the IPG balance sheet and liquidity are strong, “operating disciplines... are in full force” and the company is “rigorously managing [its] flexible cost base.”
“We have multiple cost levers to align expenses with changes in revenue and our operators are executing as appropriate on both the revenue and expense sides,” Roth said.
As of noon on Thursday, Interpublic’s stock was up 6.74% from the start of the day amid a broader market increase.
IPG reported a net revenue increase of 3.3% to $8.63 billion in 2019. Net income for 2019 was $673.9 million.
Last year, the PR firms in IPG’s Constituency Management Group saw revenue grow by low single digits on both an organic and as-reported basis, CMG chairman and CEO Andy Polansky said in February.
CMG houses Weber Shandwick, Golin, DeVries Global, Current Global, Rogers & Cowan/PMK and the Axis Agency. It also includes marketing specialist firms such as Jack Morton, FutureBrand and Octagon. Other IPG PR firms operate outside CMG.