Omnicom’s quarterly revenue down 3.6%, driven by foreign exchange rates

Omnicom’s quarterly report has shown the holding group’s revenue is down by 3.6% in the second quarter of 2019 compared to the same period last year.

Changes in foreign exchange rates reduced revenue by 2.6%, the report noted, also revealing that the group’s largest client accounts for 3% of revenue, and its top 100 clients 52%. The group’s client portfolio includes the likes of Unilever, Coles, Qantas, McDonald’s and Telstra.

While North America grew by 1%, key markets experienced revenue decline, including Europe (-9.3%), Asia-Pacific (-6.1%) and Latin America (-15.8%).

The report noted that the exchange rate impacted the Asia-Pacific, Europe and Latin America. In Australia’s Asian-Pacific market, China faced a difficult comparison to 2018’s second quarter.

“Adverse global or regional economic conditions pose a risk that our clients may reduce, postpone or cancel spending on advertising, marketing and corporate communications services, which would reduce the demand for our services,” read the report.

“Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year and additional project work that usually occurs in the fourth quarter. Additionally, certain global events targeted by major marketers for advertising expenditures, such as the FIFA World Cup and the Olympics, and certain national events, such as the U.S. election process, may affect our revenue period-over-period in certain businesses.”

Advertising was up 1.3%, and healthcare performed the best, improving by 7.5%. However PR was down 3.7%, and CRM execution and support 34.6%, driven by group’s disposal of CRM execution and support businesses.

In the quarter, net profit was up US$6.5m, 1.8%, to US$370.7m in 2019’s second quarter.

On a six-month basis, global revenue dropped 4%, or US$300.5m, in the first half of this year when compared to the first half of 2018. Operating costs decreased 4.6% on a six-monthly basis, and salary and service costs dropped US$353.9m or 4.6%. Omnicom said these results reflect the positive impact of letting go of underperforming businesses, offset by the negative effect of exchange rates.

Omnicom’s agencies include OMD, PHD, and Clemenger BBDO.


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