Omnicom Group Inc. (OMC)

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Omnicom Group (OMC)

Q4 2012 Earnings Call

February 12, 2013 8:30 am ET

Executives

Randall J. Weisenburger - Chief Financial Officer and Executive Vice President

John D. Wren - Chief Executive Officer, President and Director

Analysts

James G. Dix - Wedbush Securities Inc., Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Peter Stabler - Wells Fargo Securities, LLC, Research Division

Tim Nollen - Macquarie Research

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Douglas M. Arthur - Evercore Partners Inc., Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Gregory Stein

David Bank - RBC Capital Markets, LLC, Research Division

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the Omnicom Fourth Quarter 2012 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

At this time, I'd like to now introduce you to today's conference call host, Executive Vice President, Chief Financial Officer of Omnicom Group, Mr. Randall Weisenburger. Please go ahead.

Randall J. Weisenburger

Good morning. Thank you for taking the time to listen to our fourth quarter earnings call. We hope everyone had a chance to review our earnings release. We've posted to our website both the press release and our presentation covering the information that we'd be presenting this morning. This call is also being simulcast and will be archived on our website.

But before we start, I've been asked to remind everyone to read the forward-looking statements and other information that's included on the last page of our investor presentation. I've also been asked to point out that certain of the statements made today may constitute forward-looking statements, and that those statements are our present expectations, and actual events or results may differ.

We also want to remind you that during the course of the call, we will discuss some non-GAAP measures in talking about Omnicom's performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the presentation materials.

Now we're going to begin the call with remarks from John Wren. Following John's remarks, we'll review our financial performance for the quarter, and then we'll open the call up for questions.

John D. Wren

Good morning. I'm pleased to speak to you this morning about our fourth quarter business results and the progress we are making against our key strategic initiatives and my thoughts about the rest of the year. Hopefully, all of you had a chance to review our financial results and have seen our press release this morning, increasing our quarterly dividend 33% to $0.40 per share. Thanks to an exceptional list of clients and the commitment, talent and creativity of our people, we finished the fourth quarter and the full year 2012 in a very strong position.

We enter into 2013 well prepared to respond to the continued changes in the marketplace. While the macroeconomic environment appears to be stabilizing and even improving in some areas, issues in several markets still remain unresolved. As a result, we plan for another year of modest global growth, but remain nimble enough to take advantage of opportunities as they arise. At this point in our planning, we remain focused on controlling our costs and increasing productivity. But we are cautiously optimistic as we look into the latter part of 2013 and into 2014. Let me discuss our key markets in more detail.

In the U.S., the election has settled one set of questions, but the long-term fiscal imbalances and the mounting government debt still need to be addressed. The impending decisions to be made by Congress and the administration will impact overall economic growth this year. As we have proven in the past, our operations have consistently outperformed GDP in the U.S., and we are hopeful that the slow but steady economic improvements we have seen will continue.

In Europe, we sense greater stability, but many markets remain weak and growth is likely to be slow for some time, as governments pursue structural changes in their economies and continue to operate with fiscal restraint. In the developing markets, we see stronger growth, particularly in Asia and Latin America, as those economies appear to be navigating well despite challenges in other parts of the world.

For 2012, despite all the challenges offset in part by the Olympic contribution, we generated solid organic growth and achieved our margin objectives. Before getting into specifics of our fourth quarter and 2012, I'd like to highlight the strategies that have allowed us to continue to grow and achieve our results: first, our investment in the best talent; next is our expansion of our global footprint and moving into new service areas; third, investing in our digital and analytical capability and assets around the world; finally, we continue to deliver innovative and integrated solutions using meaningful consumer insights across disciplines and platforms for the benefit of our clients.

Throughout the economic cycle, we have maintained our investments in our talent, development programs, and these will continue as a key priority across our company. It is this culture that allows our agencies to consistently attract the best talent, which, once again, was recognized around the world for their work in 2012. Let me mention just a few awards.

Adweek named PHD Media Agency of the Year. DDB was Campaign's Advertising Network of the Year. BBDO finished first in the Gunn Report 2012 Most Awarded Agency Networks in the World for the seventh year in a row and topped The Big Won awards for the sixth consecutive year. Ketchum was named 2012 Agency of the Year by PRWeek. And in December, our agencies won a record number of creative awards at the 2012 Campaign Asia-Pacific and Greater China Agency of the Year awards held in Singapore and Shanghai, significantly outpacing our competition. I want to congratulate all of our employees and agencies for their outstanding creativity in 2012.

Read the rest of this transcript for free on seekingalpha.com