IPG posts 7.4% net revenue growth in 2019, but expresses concern for staff and clients amid coronavirus outbreak

IPG’s 2019 net revenue grew 7.4% to US$8.63bn, with chair and CEO Michael Roth taking the opportunity of the results’ release to express concern and support for the company’s staff and clients in China given the Coronavirus outbreak.

“As we turn to our outlook for 2020, our first thoughts are ones of concern and support for our people, clients, and partners in China, and for everyone around the world contending with the coronavirus outbreak,” he said. “We are closely monitoring the situation and are focused on the well-being and safety of our people, and are taking appropriate steps to protect them during this difficult period.”

IPG’s Roth

The calendar year’s organic net revenue was up 3.3%, and total revenue was US$10.22bn, compared to US$9.71bn in 2018. Across the year, the company spent US$33.9m on restructuring, which it said was the “implementation of a cost initiative to better align our cost structure with our revenue, primarily related to client losses occurring in 2018.”

Salaries and related expenses were US$5.57bn, an increase of 5.1% against 2018’s costs.

Roth said both the yearly and fourth quarter results were “strong” and delivered on targets.

“We are pleased to report strong fourth quarter performance, as well as full-year financial results that deliver on our targets. Our results again demonstrate the strength of our client-centric, integrated model, and the quality of our offerings,” Roth noted.

“Our differentiated culture and strategy are key reasons our long-term trajectory has been so strong, which has helped us to deliver leading organic growth and margin improvement in recent years.”

Asia Pacific’s net revenue for the year fell 4.2% (organic fell 0.3%). For the quarter, Asia Pacific’s revenue was down 7.8% (3.0% organic).

IPG’s 2019 operating performance (Click to enlarge)

In quarter four, net revenue was US$2.43bn, and organic net revenue growth 2.9%. Salaries and related expenses totalled US$1.43bn, which was an increase of 0.6% compared to the 2018 quarter.

“As our results demonstrate, IPG remains highly relevant to marketers in an increasingly crowded and complex environment. We have a strong portfolio of companies that combine marketing expertise and future-facing media, data and technology capabilities, which we can deliver through our collaborative open architecture model,” Roth added.

“Our 2020 targets are for organic growth of 3% and to further improve EBITA margin by an additional 20 basis points. We remain committed to our robust capital return program, as is evident in today’s announcement that our Board has again approved an increase in our dividend. We are also focused on debt reduction, with a view toward returning to share buybacks in the future as part of our capital allocation programs. We are confident that this combination of operating performance and capital returns will allow us to build on our strong track record of enhancing shareholder value.”

The board approved a 9% increase in the quarterly dividend to US$0.255 per share.

IPG’s agencies include Ensemble, Future Brand, Initiative, McCann World Group, UM and the Mullen Lowe Group.


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