* Q4 EPS 73 cents; Wall St. estimate 72 cents
* Revenue down 3.1 pct to $3.27 bln; estimate $3.18 bln
* Sees sustained organic rev growth in latter half of 2010
* Shares rise 1.7 percent
(Adds details, company and analyst comment, byline)
By Franklin Paul
NEW YORK, Feb 10 Omnicom Group Inc (OMC.N) said
on Wednesday its quarterly earnings fell 15 percent as
depressed corporate marketing budgets, particularly from auto
makers, undercut profit from its network of advertising and
Home to agencies including BBDO Worldwide and DDB
Worldwide, Omnicom said its automotive business was down 25
percent, but said it expects to see growth later this year as
effect of the global economic slowdown abates.
"While the economic challenges are not behind us and the
results of businesses vary by business type and geography, we
have begun to see optimistic signs of recovery and more
widespread areas of stability," Chief Executive Randall
Weisenburger said on call with analysts.
Omnicom, whose clients include Anheuser-Busch, McDonald's
and Pfizer, said the fourth quarter was the "toughest economic
period" in its history. Its net income was $229.6 million, or
73 cents a share, down from the $271.0 million, or 87 cents a
share, a year earlier.
The results were slightly higher than the 72 cents a share
profit that was expected on average by Wall Street analysts,
according to Thomson Reuters I/B/E/S.
Revenue at Omnicom, declined 3.1 percent to $3.27 billion,
but outpaced estimates of $3.18 billion. International revenue
increased 1.5 percent, while domestic revenue fell 7.3
Also better-than-expected was Omnicom's organic revenue, a
closely watched industry benchmark that excludes foreign
currency impact and recent acquisitions, which decreased by 6.3
percent. Analysts had expected a decline of about 9 percent.
Omnicom said it expects a return to sustainable organic
revenue growth in the second half of 2010.
RECRUITMENT, MARKETING STILL SOFT
The results come one day after Walt Disney Co posted solid
quarterly results [ID:nN09214907] bolstered in part by a
recovering advertising market, although one analyst
characterized the market as merely "getting less bad."
So far, the media industry has seen pockets of growth in
advertising, largely limited to national cable television and
Internet search. But broadly, spending is still under pressure,
with corporations hesitant to open up their wallets for the
sort of costly marketing campaigns that are the lifeblood of
Omnicom said its recruitment, marketing and advanced
businesses continued to suffer, weighing down good overall
performances for advertising and marking services.
RBC Capital Markets analyst David Bank called Omnicom's
report incrementally positive, and he was not put off by the
notion that its recovery will not gather steam until later in
"They are in a bunch of businesses that ... have been
lagging," he said. "It would have been worrisome if you didn't
see the trajectory moving in the right direction."
Looking ahead, Omnicom said its January business was
positive, but expects a "modest financial challenge" in the
first quarter, when organic revenue will again decline compared
to one year ago.
The company added that it expects to be "more aggressive"
with acquisitions than in the past, and is considering raising
its dividend and resuming a share repurchase program.
Omnicom shares rose 58 cents to $35.83 in midday trade on
the New York Stock Exchange. The shares have slipped about 10
percent so far this year, but are still up more than 25 percent
from a year ago.
(Reporting by Franklin Paul; editing by John Wallace, Derek
Caney and Bernard Orr)