Omnicom slumps
REUTERS — Omnicom Group Inc. reported a 14 percent drop in quarterly earnings as advertising spending slumped badly at the end of the year, but its profit and revenue showed more resilience to budget cutbacks than Wall Street had expected.
The world’s largest advertising company said fourth quarter income fell to $271 million, or 88 cents a share, surpassing the 82-cents-a-share average analyst forecast, according to Reuters Estimates. A year ago, it posted income of $313.9 million, or 96 cents a share.
Omnicom, parent company of agencies such as BBDO Worldwide and DDB Worldwide, typically gets a boost in the fourth quarter from advertisers using up excess budget on special events before the year end.
But analysts have said that sort of spending likely crashed with the economy last year, taking a bite out of quarterly revenue across the advertising industry.
At Omnicom, revenue fell 7 percent to $3.37 billion, but also came in slightly stronger than Wall Street expectations of $3.36 billion. Organic revenue, a closely watched industry benchmark that excludes foreign currency impact and recent acquisitions, dropped 2.3 percent.
Omnicom’s client list includes such corporate titans as Anheuser-Busch Cos Inc BUD.N and McDonald’s Corp (MCD.N), as well as the troubled automaker Chrysler. Concerns that major clients, especially Chrysler, would scale back spending caused Omnicom to move ahead with dramatic cost-cutting plans late last year, sources have said.
The sources said that across its agencies, Omnicom cut between between 2,800 to 3,500 positions out of a total of about 70,000. Shares of Omnicom are down about 38 percent in the last year.
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