Omnicom's net income dips as revenue shrinks in UK and North America

Omnicom's net income for 2017 dropped 5.2%, to $1.09bn (£780m), with UK and North American revenues dropping last year.

Omnicom Group's revenue by region
Omnicom Group's revenue by region

This was partly due to the US Tax Cuts and Jobs Act which increased the group’s taxes by $106.3m in the final quarter.

This resulted in net income for the last quarter of 2017 taking a hit and dropping 27.4% to $254.4m, from $350.3m in the same period of 2016.

Lowered full-year net income is also attributable to a drop in the group’s revenue which dropped 0.9% to $15.27bn. 

Although the group’s full-year organic revenue grew 3%, it noted a drop in its acquisition revenue, net of disposition revenue of 4.2%, resulting in a loss of $647.3m.

Regionally, Omnicom’s UK revenues dropped by 0.9%, while its North American business shrunk 5.3%.

The group performed better in the Euro markets and other Europe which grew 9.4%, Asia-Pacific (0.9%), Latin America (16.8%), and the Middle East and Africa (12.8%).

In terms of organic revenue by region, Omnicom reported full-year growth of 0.6% in North America and 5.1% in the UK. It also grew by 0.9% in Asia-Pacific, 9.4% in Euro and Other Europe, 16.8% in Latin America and 12.8% in Middle East and Africa. 

The bulk of Omnicom’s revenue comes from North America (56.9), followed by Euro Markets and Other Europe (17.9%) and Asia-Pacific (10.8%). The UK contributed 9.1% of the group’s revenues.

By discipline, Omnicom’s advertising practice shrunk 0.6% and accounted for just over half (53.3%) of its revenue. Its CRM consumer experience and CRM execution and support dropped 3.2% and 1.6% respectively and jointly accounted for nearly a third (31.6%) of the group’s revenue.

The disciplines that showed revenue growth over the past year were healthcare (3.3% which contributed 6.1% to the group’s revenue and PR (0.1%) which contributed 9%.

In the fourth quarter, the group’s revenue dropped by 1.5% to $4.18bn and across the group’s disciplines, revenue performance was: advertising (-4%), CRM consumer experience (2.8%), CRM execution & support (1.8%) and public relations (1.1%), while healthcare (-1.8%).

This comes in under analyst estimates of $4.21bn, reported Reuters

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