Omnicom Group has reported a rise in revenue from organic growth, up 11.9% in its first-quarter report of 2022.
It also noted that revenue for the global media, marketing and corporate communications holding company decreased 0.5% to USD $3,410.3 billion (AUD $4,609.5 billion) from USD $3,426.9 billion (AUD $4,632 billion) in the first quarter of 2021.
According to the report, the components of the change in revenue included a decrease in revenue from the negative impact of foreign currency translation of 2.5%, a decrease in acquisition revenue, net of disposition revenue, of 9.9% in the Advertising & Media discipline in the United States, and an increase in revenue from organic growth of 11.9%.
The organic growth in the first quarter of 2022 across the company’s regional markets is 10.6% for the United States, 9.6% for Other North America, 10.3% for the United Kingdom, 13.8% for the Euro Markets & Other Europe, 11.1% for Asia Pacific, 9.3% for Latin America and 63.8% for the Middle East & Africa.
Organic growth increased across all of our fundamental disciplines: 9.1% for Advertising & Media, 20.3% for Precision Marketing, 13.8% for Commerce & Brand Consulting, 68.0% for Experiential, 6.3% for Execution & Support, 14.0% for Public Relations and 7.7% for Healthcare.
Omnicom net income decreased to USD $114.0 million (AUD $154.5 million), or 39.6%, compared to USD $173.8 million (AUD $235.01 million) in the first quarter of 2021.
The reported noted that the impact of charges arose from the effects of the war in Ukraine reduced net income – Omnicom Group Inc. by USD $118.2 million (AUD $159.9 million).
Operating expenses increased USD $95.8 million (AUD $129.6 million), or 3.2%, to USD $3,057.3 million (AUD $4.137 million) compared to the first quarter of 2021, including a decrease of 2.5% from the impact of foreign currency translation and reflect the charges incurred in connection with the effects of the war in Ukraine.
Operating profit decreased to USD $353.0 million (AUD $477 million) compared to USD $465.4 million (AUD $629.31 million) during the first quarter of 2021.
John Wren, chairman and chief executive officer of Omnicom Group Inc., said: “Our strong momentum continued in the first quarter with 11.9% organic revenue growth, reflecting our persistent focus on achieving better outcomes for our clients across all our business disciplines.
“We continued to invest in areas important to our clients’ growth, continued to make acquisitions in strategic areas of growth, and repurchased a significant amount of our shares.
“Despite uniquely challenging global events, we remain confident that our high-quality and diverse portfolio positions us strongly for future growth, both in 2022 and beyond,” he added.
Elsewhere in the report, the company noted that they had “historically conducted operations in Russia and Ukraine through local agencies in which we hold a majority stake.”
“During the first quarter of 2022, the war in Ukraine required us to suspend our business operations in Ukraine. The war resulted in the imposition of sanctions by the United States, the United Kingdom, and the European Union that affect the cross-border operations of businesses operating in Russia.”
The company said that Russian regulators have imposed imposed currency restrictions and regulations that created uncertainty in their ability to recover investment in their businesses and to exercise control over the operations.
In addition, many multinational companies, including many of our large clients, have ceased or suspended their operations in Russia. The report added that with being unable to continue operations in Russia without additional funding, which they will not provide, is uncertain.
Omnicom said: “As a result, we have sold, or committed to dispose of, all of our businesses in Russia. Accordingly, we recorded pre-tax charges of $113.4 million in the first quarter of 2022 primarily consisting of the net investment in our Russian businesses, and also including charges related to the suspension of operations in Ukraine.
“The impact of the Russia and Ukraine operations as of and for the quarter ended March 31, 2022 was not material to our consolidated revenue, operating profit, and financial position and is not expected to be material for the full year.
“We will continue to monitor these ongoing geopolitical events, evaluate available options to seek to mitigate further risk of loss and continue to evaluate the impact, if any, on our goodwill impairment test, which will be performed in June 2022.”