Emily Tan
Jul 27, 2017

'Increased client caution' impacts IPG's results for first half of 2017

Net income falls 28 percent, partly due to sales of businesses, as revenue drops 0.6 percent.

Michael Roth, chairman and chief executive of Interpublic
Michael Roth, chairman and chief executive of Interpublic

Interpublic Group's net income for the first half of the year is down 28 percent year-on-year due to increased caution in client spending.

Over the first six months of the year, the net income available to IPG common stockholders was $116.2 million, a drop of 28 percent from the net income a year ago of $162.3 million.

Income before tax for the period dropped 4 percent to $184.9 million.

Revenues for the first half of 2017 dropped 0.6 percent compared to the same period last year to $3.64 billion. The proportionally greater drop in net income can be attributable to net losses of $13.1 million and $12.2 million, respectively, on sales of businesses.

While US revenues increased by 0.5 percent to $2.27 billion, IPG's international revenues dropped 2.4 percent to $1.37 billion.

"Client spending in the quarter reflected increased caution, but we don’t see evidence of a broad-based economic downturn," Interpublic chairman and chief executive Michael Roth said. "Across the portfolio, we remain confident in the outstanding quality of our people and our work."

Revenues in the second quarter declined 1.7 percent year-on-year to $1.88 billion. While net income for the quarter dropped nearly 40 percent to $94.7 million.

Interpublic's international revenues decreased 3.3 percent in the quarter while its US revenues dropped 0.7 percent.

Roth however stated his confidence in the group's ability to meet its organic growth targets for the year thanks to its investments in data and technology: "Applying these capabilities across our client roster positions allow us to achieve the low end of our 3 percent to 4 percent organic growth target for the year."

Costs will also be a priority, Roth said. "We remain committed to delivering 50 basis points of operating margin expansion in 2017."

Interpublic's agencies include R/GA, FCB, McCann Worldgroup, MullenLowe and media agencies UM and Initiative under IPG Mediabrands.

Source:
Campaign UK

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