Omnicom Boosts Organic Revenue Growth Estimate Amid ‘Uniquely Challenging Global Events’

Charges arising from effects of the war in Ukraine cut first-quarter net income by $118.2 million

Omnicom Group said its global revenue in the first quarter decreased 0.5% from a year earlier.

Photo: Pavlo Gonchar/Zuma Press

Omnicom香蕉视频苹果下载 Group Inc. said its organic revenue grew 11.9% in the first quarter of 2022 and that it is confident in its growth “despite uniquely challenging global events,” including the war in Ukraine, the Covid-19 pandemic, rising inflation and supply-chain disruptions.

香蕉视频苹果下载The New York-based advertising giant, which owns agencies including BBDO, DDB and TBWA, boosted its forecast for organic revenue growth this year to between 6% and 6.5%, from its earlier estimate of 5% to 6%.

Organic revenue is a metric that removes effects of currency fluctuations, acquisitions and disposals.

香蕉视频苹果下载“Our revenue performance reflects the continuing investment that our clients are making to strengthen their marketing, branding, consumer experience, e-commerce and digital transformation efforts in a rapidly evolving digital economy,” said John Wren, Omnicom’s chief executive, during an earnings call.

Omnicom said its global revenue in the first quarter decreased 0.5% to $3.41 billion from $3.43 billion a year earlier. That beat analysts’ estimate of $3.29 billion, according to FactSet.

香蕉视频苹果下载Net income fell $114 million, or 40%, to $173.8 million from a year earlier. Omnicom said charges arising from the effects of the war in Ukraine reduced net income by $118.2 million.

Omnicom said in March it would withdraw from Russia and work with local partners to dispose of its investment positions there. The firm has historically operated in Ukraine and Russia through local agencies in which it holds a majority stake.

Marketers will remain busy despite the war in Ukraine, inflation and other disruptions, Omnicom executives said.

“Overall, we haven’t seen any reductions in the spending plans of our clients at this point, and clients need to continue to sell stuff in an inflationary environment or in a noninflationary environment, and we expect the clients that are going to be successful are going to continue to invest in marketing and branding and continue to invest in the services that we provide them,” said Phil Angelastro, executive vice president and chief financial officer, on Omnicom’s earnings call.

Last week, rival Publicis Groupe SA reported organic revenue growth of about 11% in the first quarter, saying marketers are increasingly seeking its help in the areas of first-party data, digital media and commerce.

The company reaffirmed its expectation to deliver organic revenue growth at the high end of its target of 4% to 5% this year.

Its first-quarter performance would ordinarily have led Publicis to upgrade its expectations for the year, but factors such as the conflict in Ukraine and inflation were creating too much uncertainty to do so, the company said.

Bernstein analysts said that despite the numerous factors impacting the digital ad space and major players in it, including Meta Platforms Inc.’s Facebook and Alphabet Inc.’s Google, its longer-term view on digital advertising remains unchanged

“E-commerce will re-normalize growing at a mid-teens [compound annual growth rate] while digital ads should grow at a slightly higher clip given incremental spend tailwinds from TV migration and digital services-related advertising,” analysts said in a note Tuesday.

香蕉视频苹果下载“It will be bumpy this year and there’s no shortage of new names putting their hand up for a share of the lucrative digital ad pie,” the note added.

Write to Megan Graham at megan.graham@wsj.com

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