Omnicom sees 3.5% organic growth in Q4

Full-year organic growth increased by 2.8%, but revenue fell 2.2%.

Omnicom: Q4 global revenue reached $4.14bn
Omnicom: Q4 global revenue reached $4.14bn

Omnicom enjoyed a stable fourth quarter with a 1.3% increase in total revenue and 3.5% lift in organic revenue, although full-year revenue for 2019 decreased 2.2% to $14.95bn.

In the fourth quarter, global revenue reached $4.14bn, while operating profit increased by $19.2m, or 3.1%, to $646.4m. 

While revenue for the 12 months ended 31 December 2019 declined, full-year organic growth increased by 2.8% over 2018. Operating profit for the 12 months decreased by $11.2m, or 0.5%, to $2.12bn.

This is a stronger performance than Publicis Groupe's 4.5% drop in organic growth in the fourth quarter and 2.3% decline in organic growth for the full year, following what chairman and chief executive Arthur Sadoun described as "a challenging year".

A strong performance by Omnicom Health Group – with organic revenue growth of 12.9% in the fourth quarter and 9.5% in the full year – contributed to the company's overall growth in 2019, John Wren, Omnicom chairman and chief executive, said on a call with investors. The group services more than 250 clients, including the world's top 25 pharmaceutical and biotech companies. I

Elsewhere, advertising and media agencies experienced a 5.1% increase in organic growth in the final quarter of last year and a 4.5% increase for the full year, while the CRM consumer experience division increased 3.3% in the last three months and 1.6% in the full year. Both CRM execution and support and Omnicom PR saw organic revenue decrease, by 6.0% and 2.5% respectively, in the fourth quarter and 3.2% and 2% respectively for the full year.

"We’re pleased with our performance for Q4 and the full year 2019, and I’m confident that we are well positioned as we enter 2020," Wren said.

Regional breakdown

Markets that saw organic growth increase in the last three months of the year include "Euro markets and other Europe" (4.7%), Asia-Pacific (4.5%), the UK (3.3%) and the US (2.8%). 

The Middle East and Africa's organic growth increased 19.5% in the fourth quarter, although chief financial officer Philip Angelastro noted that the region is not expected to be "significant or meaningful… as an overall percentage of Omnicom’s portfolio and Omnicom’s growth". It is the group's smallest region.

"Other North America" fell 2.3%, while Latin America dropped 1.3%. 

China challenge

In the full year, growth in China was down to "mid-single digits", Wren revealed, although he added that it accounts for "less than 1.5% of revenue".

Speaking on the impact of travel restrictions and business disruption during the coronavirus outbreak, Angelastro added: "I think the current situation presents a very different set of challenges. So until we get some more clarity and so the situation resolves itself, I think our expectations are similar to everybody else – there is just little bit too much uncertainty to have a clear picture as to how it’s going to roll out in China."

Wren said the virus has not affected January results and that "work goes on for most clients". In fact, he noted, some clients "are even spending more because of the products that they’re selling to the marketplace". Unsurprisingly, Omnicom expects the events business to be most affected in the first quarter, with many events being cancelled.

Wren added that the company's primary focus is "the safety of our employees". 

A version of this article first appeared on Campaign Asia-Pacific

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