Omnicom Group (NYSE: OMC) released second-quarter 2019 results on Wednesday after the market closed, detailing a relatively quiet -- if slightly better-than-expected -- performance in which the marketing and corporate communications specialist steadfastly worked to navigate today's increasingly complicated consumer environment.
With shares down around 1% on Thursday afternoon as of this writing, let's take a closer look at what Omnicom had to say.
IMAGE SOURCE: GETTY IMAGES.
Omnicom Group results: The raw numbers
Net income (attributable to Omnicom)
Net income per common share (diluted)
DATA SOURCE: OMNICOM GROUP.
What happened with Omnicom this quarter?
- Net income this quarter was boosted by favorable one-time tax adjustments of $11 million.
- Omnicom does not provide specific quarterly financial guidance. So for perspective, these results compared favorably to analysts' consensus estimates for lower earnings of $1.61 per share on roughly the same revenue.
- The revenue decline was caused by a 3.8% drop in acquisition revenue (net of dispositions) -- largely driven by last year's divestment of Sellbytel -- and a 2.6% negative impact from foreign currency exchange. These headwinds were only partially offset by the company's 2.8% organic revenue growth.
- Organic revenue climbed 3.2% in the U.S., 11.8% in other North American markets, 5.7% in the U.K., 1.5% in the Euro Markets and Other Europe, and 1.9% in the Asia-Pacific region. Organic revenue declined 2.4% in Latin America and 8.3% in the Middle East and Africa.
- As measured by "fundamental discipline," organic growth increased 4.4% from advertising, 1.9% from CRM consumer experience, and 8.4% in the healthcare segment. Meanwhile, organic sales declined 2.6% from CRM execution and support and 1.3% in public relations.
What management had to say
During the subsequent conference call with analysts, Omnicom chairman and CEO John Wren called it a "good" quarter," with organic growth essentially in line with the company's internal targets.
"The results continue to demonstrate the consistency and diversity of Omnicom's operations, our ability to deliver consumer-centric strategic business solutions to our clients, and our best-in-industry creative talent combined with market-leading digital, data, and analytical expertise," Wren added.
Also during the call, CFO Philip Angelastro suggested the impact of acquisitions, net of dispositions, would continue to be negative by roughly 3% in the third quarter before abating slightly to negative 1.5% in the fourth quarter. And assuming currencies remain steady -- perhaps unlikely given current macroeconomic and trade uncertainties -- foreign exchange should have a smaller negative impact of 1% and 0.5% in the third and fourth quarters, respectively.
Meanwhile, Wren suggested once again that Omnicom is "well-positioned to deliver" on its full-year target for organic sales growth of 2% to 3%.
In the end, there were no big surprises from Omnicom as it enters the second half of the year -- which helps explain why shares are down modestly right now, more or less in line with the broader market's movement today. But I think patient, long-term shareholders should still be encouraged with the company's position and strategic direction.
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