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Omnicom Group (NYSE: OMC) released first-quarter 2019 results early Tuesday. Similar to its previous quarterly update in February, the marketing and corporate communications leader saw its modest organic growth masked by the negative impacts of strategic business dispositions and foreign currency exchange.
This time, however, the market was more than pleased, sending Omnicom shares up 5.7% when all was said and done today. Now that the dust has settled, let's dig deeper for a better understanding of what Omnicom accomplished over the past few months.
IMAGE SOURCE: GETTY IMAGES.
Omnicom Group results: The raw numbers
| Metric | Q1 2018 | Q1 2017 | Growth (YOY) |
|---|---|---|---|
| Revenue | $3.469 billion | $3.630 billion | (4.4%) |
| Net income (available for common shares) | $263.2 million | $264.1 million | (0.3%) |
| Net income per common share (diluted) | $1.17 | $1.14 | 2.6% |
DATA SOURCE: OMNICOM GROUP. YOY = year over year.
What happened with Omnicom this quarter?
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Omnicom's net income in the first quarter of 2018 was bolstered by one-time tax items of $13.3 million, or $0.06 per share.
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Omnicom doesn't offer quarterly financial guidance. But these results were technically mixed relative to analysts' consensus estimates, which called for lower earnings of $1.09 per share on slightly higher revenue of $3.49 billion.
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The change in revenue consisted of 2.5% organic revenue growth, a 3.4% foreign exchange headwind, and a 3.6% decrease in acquisition revenue (net of dispositions).
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Organic revenue declined 3% in Latin America but climbed in every other geography, including growth of 2% in the U.S., 6.1% for other North American markets, 1.3% in the UK, 4% for Euro markets and Other Europe, 2.1% in the Asia-Pacific region, and 12.8% in the Middle East and Africa.
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Measured by "fundamental discipline," organic growth was driven by a 6.8% increase from healthcare and 5.1% from advertising. CRM organic sales fell 0.6%, CRM execution and support declined 3.3%, and public relations dropped 0.5%.
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Omnicom's TBWA\Worldwide subsidiary acquired a majority interest in Belgium-based creative agency De Vloer during the quarter. De Vloer will operate as a separate brand within the TBWA\Belgium group.
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Omnicom also sold outsourced-sales support and services company MarketStar during the quarter, as well as a "few other small businesses" in its portfolio as part of its ongoing strategy to divest non-core assets.
What management had to say
During the subsequent conference call, Omnicom Chairman and CEO John Wren credited the company's growth to "broad participation across all of our agencies, disciplines, and client sectors."