Omnicom earnings beat estimates, bode well for Publicis

Reuters

* Third-qtr adjusted earnings $0.82/shr vs est $0.80

* Revenue $3.49 bln vs est $3.48 bln

* Omnicom shares rise 2 pct, Publicis up 3 pct

By Sruthi Ramakrishnan

Oct 15 (Reuters) - Omnicom Group Inc, the largestU.S. advertising company, reported a better-than-expectedquarterly profit as ad spending strengthened in its home market,reinforcing expectations of strong growth for the industry inthe second half.

Omnicom's shares rose 2.5 percent in New York on Tuesday,while those of merger partner Publicis Groupe SA rose3 percent in Paris ahead of its results on Wednesday.

Both Omnicom and Publicis get about half of their revenuefrom the United States.

The $35.1 billion merger with France-based Publicis is ontrack to close early next year, Chief Executive John Wren saidon a post-earnings conference call.

Omnicom, home to agencies such as BBDO Worldwide and Goodby,Silverstein & Partners, said U.S. revenue rose 3.2 percent to$1.82 billion in the third quarter.

Organic revenue grew 4.1 percent overall and 5 percent inthe United States.

"(Organic growth) is improving from the first half. I thinkit's kind of set up to be a little bit stronger in the secondhalf," Edward Jones analyst Robin Diedrich told Reuters.

Revenue from the euro area declined by 1.6 percentorganically, led by Germany and France.

Excluding merger expenses, Omnicom earned 82 cents pershare, ahead of the 80 cents expected by analysts.

Revenue rose 2.5 percent to $3.49 billion.

Analysts had expected revenue of $3.48 billion, according toThomson Reuters I/B/E/S.

Omnicom is the first major advertising company to reportquarterly results.

APPROVAL PROCESS

The merger with Publicis, announced in July, has receivedclearances in South Korea and South Africa and the approvalprocess was "well underway" in 44 countries, company executivessaid on the call.

The company said there were no plans to merge the twocompanies' individual agency brands.

Omnicom, whose clients include PepsiCo, Apple Inc, Microsoft Corp and AT&T, said reactionfrom clients and employees to the merger had been "verypositive".

"I'd be much more surprised if (client losses) didn't happenin this case," said Diedrich, who downgraded the company's stockto "hold" from "buy" following the merger announcement in theexpectation there would be some client defections.

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