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Omnicom Group Reports Second Quarter and Year-to-Date 2017 Results

Omnicom's worldwide revenue in the second quarter of 2017 decreased 2.4% to $3,790.1 million from $3,884.9 million in the second quarter of 2016. The components of the change in revenue included a decrease in revenue from the negative foreign exchange rate impact of 1.5%, a decrease in acquisition revenue, net of disposition revenue of 4.4% and an increase in revenue from organic growth of 3.5% when compared to the second quarter of 2016.

Across our regional markets, organic growth in the second quarter of 2017 as compared to the second quarter of 2016 was 0.2% in North America, 9.3% in the United Kingdom, 7.8% in the Euro Markets and Other Europe, 7.1% in Asia Pacific, 5.0% in Latin America and 20.4% in the Middle East and Africa.

Organic growth in the second quarter of 2017 as compared to the second quarter of 2016 in our four fundamental disciplines was as follows: advertising increased 4.2%, CRM increased 3.7%, public relations decreased 0.3% and specialty communications increased 2.2%.

Operating profit in the second quarter of 2017 increased $3.7 million, or 0.7%, to $565.5 million from $561.8 million in the second quarter of 2016. Our operating margin for the second quarter of 2017 increased to 14.9% versus 14.5% for the second quarter of 2016.

For the second quarter of 2017, our income tax rate was 32.0% compared to 32.5% for the same period in 2016. The year over year difference resulted from the adoption of FASB Accounting Standards Update 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") on January 1, 2017. Income tax expense for the second quarter of 2017 included a benefit of $2.3 million arising from a cash tax deduction on restricted stock awards that vested and stock option awards that were exercised in the second quarter of 2017 in excess of the book tax deduction on the amortization of these awards over the vesting period. In prior periods only the book tax deduction was reflected in income tax expense. ASU 2016-09 is required to be adopted prospectively, and prior periods have not been restated.

Net income - Omnicom Group Inc. for the second quarter of 2017 increased $2.5 million, or 0.8%, to $328.6 million from $326.1 million in the second quarter of 2016, including the effects of the adoption of ASU 2016-09.

Year-to-date

Diluted net income per common share for the six months ended June 30, 2017 increased seventeen cents, or 7.6%, to $2.42 per share compared to $2.25 per share for the six months ended June 30, 2016.

Worldwide revenue for the six months ended June 30, 2017 decreased 0.1% to $7,377.6 million from $7,384.0 million in the same period of 2016. The components of the change in revenue included a decrease in revenue from the negative foreign exchange rate impact of 1.3%, a decrease in acquisition revenue, net of disposition revenue of 2.7% and an increase in revenue from organic growth of 3.9% when compared to the same period of 2016.

Across our regional markets, organic growth for the six months ended June 30, 2017 as compared to the same period of 2016 was 0.6% in North America, 8.7% in the United Kingdom, 8.0% in the Euro Markets and Other Europe, 8.1% in Asia Pacific, 5.2% in Latin America and 28.7% in the Middle East and Africa.

Organic growth for the six months ended June 30, 2017 compared to the same period in 2016 in our four fundamental disciplines was as follows: advertising increased 5.2%, CRM increased 2.9%, public relations increased 0.7% and specialty communications increased 2.7%.

Operating profit for the six months ended June 30, 2017 increased $21.6 million, or 2.3%, to $975.5 million compared to $953.9 million for the same period in 2016. Our operating margin for the six months ended June 30, 2017 increased to 13.2% versus 12.9% for the same period in 2016.

For the six months ended June 30, 2017, our income tax rate was 30.8% compared to 32.6% for the same period in 2016. The year over year difference resulted from the adoption of ASU 2016-09 on January 1, 2017. Income tax expense for the six months ended June 30, 2017 included a benefit of $14.8 million arising from a cash tax deduction on restricted stock awards that vested and stock option awards that were exercised in the first six months of 2017 in excess of the book tax deduction on the amortization of these awards over the vesting period. In prior periods only the book tax deduction was reflected in income tax expense. ASU 2016-09 is required to be adopted prospectively, and prior periods have not been restated.

Net income - Omnicom Group Inc. for the six months ended June 30, 2017 increased $25.9 million, or 4.8%, to $570.4 million from $544.5 million in the same period in 2016.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures in describing our performance. We use EBITA (defined as earnings before interest, taxes and amortization of intangibles) and EBITA margin (defined as EBITA divided by revenue) as additional operating performance measures, which...


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