Omnicom Q1 sees revenue fall, but organic growth up 11.9%

Omnicom Group Inc. (OMC) today reported lower worldwide revenue for the first quarter of 2022, down 0.5% from the prior corresponding reporting period to $3.41 billion. dollars (A$4.611 billion), while in APAC there was positive organic growth.

Omnicom reported net profit of $173.8 million (A$235.01 million) in the first quarter. On a per share basis, the New York-based company said it had net profit of US83c (AU1.12). Earnings, adjusted for one-time costs, were US$1.39 (AU$1.88) per share.

Operating profit fell to $353 million ($477 million) from $465.4 million ($629.31 million) in the first quarter of 2021. Meanwhile, the operating margin of Omnicom for the first quarter of 2021 fell to 10.4%, from a rise of 13.6%. for the previous corresponding reporting period.

The 0.5% decline in revenue is believed to be due to charges related to the war in Ukraine and the decision to cease all operations in Russia earlier this year. Its portfolio includes agencies such as BBDO Worldwide, TBWA Worldwide, DDB Worldwide and Omnicom Media Group. The company only filed first-quarter results through the end of February, which include its Russian operations.


Other components of the revenue variance included a revenue decline of 2.5% due to the negative impact of currency translation, a decline in acquisition revenue, net of disposal revenue, of 9.9% , mainly in the Advertising and Media discipline in the United States, and an increase in revenue by organic growth of 11.9%.

On a conference call with investors, Omnicom Group CEO John Wren acknowledged the ongoing conflict.

“Our focus remains the safety and well-being of our Ukrainian colleagues and their families,” Wren said.

Despite the company’s focus on humanitarian aid, he stressed that “the company’s assistance to its employees in the region” will continue.

Despite a decline in revenue, Omnicom’s financial results have been strong – the company recorded overall organic revenue growth of 11.9% and expects to continue its strong performance throughout the year.

“Overall, we are very pleased with our quarterly results,” Wren said.

Strong year-on-year organic growth was seen across all regions. In North America, the United States recorded an increase of 10.6%, while the rest of the continent increased by 9.6%. Latin America grew by 9.3%. In the UK, organic growth increased by 10.3%. The rest of Europe saw a spike of 13.8%, while Asia-Pacific recorded an increase of 11.1%. Finally, the Middle East and Africa saw the largest marginal increase, with an increase of 63.8%.

Organic growth in the first quarter of 2022 compared to the first quarter of 2021 increased in all its fundamental disciplines, including: 9.1% for advertising and media, 20.3% for precision marketing, 13.8% for commerce and brand consulting, 68.0% for experiential, 6.3% for Execution & Support, 14.0% for Public Relations and 7.7% for Healthcare.

EBITA in the first quarter of this year fell by $112.9 million (A$152.66 million), or 23.3%, to $372.4 million (A$503.56 million) compared to the first quarter of 2021. The company’s EBITA margin of 10.9% increased from 14.2%. Again, OMG blames accusations surrounding the Russian-Ukrainian conflict for the drop in performance. Excluding these charges, the company’s adjusted EBITA of $485.8 million (A$656.90 million) increased by 0.1%. The adjusted EBITA margin was 14.2%.

“Our cash flow and balance sheet remain very strong and support our primary uses of cash, dividends, acquisitions and share buybacks,” Wren said on today’s call.

“We continue to plan cautiously for the remainder of the year, given the ongoing war in Ukraine, the effects of the pandemic on markets, the continued disruption of global supply chains and the economic risks posed by higher inflation and higher oil prices.That said, given our strong performance in the first quarter, we are raising our organic growth guidance to between 6% and 6.5% for the full year 2022. »

“I am confident that we will continue to perform at a high level throughout this economic cycle as our agencies remain an integral partner in growing our clients’ businesses,” Wren said.

Omnicom Group is currently trading at US$80.82 (A$109.28) as of April 20, 2022 and has a market capitalization of US$16.73 billion (A$22.62 billion).