Omnicom reports Q3 growth, beats estimates
By Abimbola Mohammed
Omnicom Group Inc. reported third-quarter revenue totaling $3.6 billion, up to 3.9% with organic growth (which excludes currency and M&A impact) of 3.3%.
The company attributed the growth to “notable performances” from its advertising and media division, precision marketing and healthcare disciplines.
Reported revenue in the third quarter of 2023 increased $134.7 million, or 3.9%, to $3,578.1 million. Worldwide revenue growth in the third quarter of 2023 compared to the third quarter of 2022 was led by an increase in organic growth of $113.1 million, or 3.3%.
The impact of foreign currency translation increased revenue by $59.1 million, or 1.7%. Acquisition revenue, net of disposition revenue, reduced revenue by $37.5 million, or 1.1%, primarily due to dispositions earlier in the year in the Execution & Support discipline, partially offset by acquisitions in the third quarter of 2023 in the Advertising & Media and Public Relations disciplines.
John Wren, Omnicom CEO, said: “We are pleased with our strong organic revenue growth of 3.3%, with notable performances in our Advertising & Media, Precision Marketing, and Healthcare disciplines. Our year-to-date organic growth of 4.0% remains in line with our full-year expectations, which reflects the resiliency of our business even in periods of economic uncertainty.
“Omnicom continued to post strong profitability and earnings growth in the quarter, and our recent business wins validate the benefits of our client strategy in this rapidly evolving marketplace. We are very well positioned for a recovery in business conditions, with a strong balance sheet and leading creativity in all of our service disciplines.”
Asked about the fourth quarter on an earnings call, Wren said the visibility would not be great until late November, although in most years project work comes through related to holiday activity to make it the company’s strongest period. That said, he added, macroeconomic uncertainties have not improved and strife in the Middle East adds further uncertainty.
But looking ahead to next year, Wren said he’s confident it will be a strong one for the company given this year’s wins, many of which will kick in during the first quarter of 2024. “We’re set up to have a very successful 2024,” he said. More people returning to the office, he added, “will support our growth.”
As for declines in the tech industry, which have negatively impacted Adland generally this year, CFO Phil Angelastro said, “they’ll come back,” to more usual levels of ad spending to promote their brands. The big question, he added, is when.
By region organic growth in the U.S. was 2.7% and 5.7% in Europe. The UK posted 4.4% growth. LATAM was up over 19% while the Middle East, Africa and areas in North America outside the U.S. were down.
By discipline, Advertising and media was up 6.1%, precision marketing up 4.3% and healthcare up 3.8%. Experiential marketing units posted a 9.2% increase. Organic shortfalls were posted by PR operations (-5.5%), execution and support (-3.6%) and commerce and branding (-1.7%).
Third party service costs, including supplier costs where the firm acts as principal in providing client services like media, were up 15% to $678.8 million.
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