Markets
OMC

Omnicom Group Inc. Communicates Another Strong Quarter

Omnicom Group released fourth-quarter 2015 results on Tuesday morning, and shares climbed more than 2% as the company once again demonstrated its ability to weather persistent foreign exchange headwinds.

Let's take a closer look at what the marketing and corporate communications specialist accomplished:

Omnicom results: The raw numbers

Q4 2015 Actuals Q4 2014 Actuals Growth (YOY)
Revenue $4153.3 million $4195.1 million -1%
Net Income (Available for Common Shares) $331.6 million $329.5 million 0.6%
Net Income Per Share $1.35 $1.30 3.8%

YOY: Year over year.

What happened with Omnicom this quarter?

  • Omnicom's top line benefited from a combination of 5.3% organic growth -- which excludes currencies, acquisitions, and divestments -- and another slight increase in revenue from acquisitions.
  • That includes a 12.6% increase in advertising organic revenue, a 1.5% decline from CRM, a 6.9% decline from public relations, and a 5.9% decline in specialty communications.
  • On a regional basis in Q4, organic revenue grew 4.7% year over year in North America, 4.9% in the U.K., 3.5% in Euro Markets and Other Europe, 8.6% in Asia-Pacific, 0.4% in Latin America, and 5% in Africa/Middle East.
  • Organic growth was more than offset by a 6.6% negative impact from foreign currency exchange.
  • Omnicom generated more than $1.6 billion in free cash flow in 2015, helping fund the company's acquisitions and ambitious capital returns programs.
  • In 2015, Omnicom maintained its long-standing streak of returning more than 100% of net income to shareholders through dividends and repurchases:

Data source: Omnicom Group.

  • Omnicom acquired Wednesday Agency Group, a leading integrative creative agency for the fashion, luxury, and consumer lifestyles industry. Wednedsay's primary focus includes fully integrated campaigns, content strategy, digital design and branding, and production.

What management had to say

As Omnicom CEO John Wren said during the subsequent conference call:

[I]t was an excellent quarter for Omnicom. We recruited some of the best talent in our industry, continued to win significant new business, and made a couple of important agency acquisitions. It was terrific way to end the year. [...] We also achieved our margin and net income targets for the quarter and the full year despite significant strengthening of the U.S. dollar and an impact on revenue and [earnings before interest and taxes].

Looking forward

Omnicom doesn't normally provide specific financial guidance, but Wren did elaborate during the call that foreign exchange in 2016 is expected to "continue to be a headwind on our revenue and earnings, but hopefully at a less significant rate."

In the end, it's evident Omnicom continues to hold steady its leadership position as it navigates the shift from traditional to digital advertising and all the while rewarding shareholders for their patience through aggressive capital returns. As we wait for for market conditions and economic weakness to improve, that's as much as investors can ask of this promising company.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Omnicom Group Inc. Communicates Another Strong Quarter originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Omnicom Group. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

OMC

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More