Credit: Petr Sidorov via Unsplash
IPG posted negative organic growth of -3.6% in the March quarter, better than expected by Wall Street analysts, as the global advertising group helped clients plan for fallout from the trade war.
Total revenue was $US2.3 billion and net revenue $2 billion. The net loss of $85.4 million included a pre-tax expense of $203.3 million for strategic restructuring pre the merger with competitor Omnicom.
IPG so far hadn't seen a “marked change” in client activity from the global trade war and the company says it is still on track for a full year an organic growth decrease of between 1% and 2%.
The results compared to Omnicom, the competitor taking over IPG to form the world’s largest advertising group, which posted revenue of $US3.7 billion in the March quarter, with organic growth at 3.4%.
IPG chief executive Philippe Krakowsky said the results were consistent with expectations.
“The long-term financial benefits of our transformation will exceed our original estimates and therefore accrue to the newly merged company once our transaction with Omnicom is complete,” he said.
Krakowsky told analysts in a briefing that economic developments and their potential ramifications have moved front and centre.
“The impact of this uncertainty is not yet clear and the implications vary widely for our clients across industries and geographies,” he said.
“Our posture, as always, has been to stay close to our clients especially in periods of heightened uncertainty.
“As of now, marketers appear to be in a phase of scenario planning, assessing the implications of possible changes to the flows of global commerce. We know that we’re all addressing these things and these changes that are taking place at speed.
“As we engage with clients in considering the decisions they may need to make when it comes to channel choices, investment levels, and the best mix of marketing disciplines required to deliver business outcomes, we will begin to get greater clarity on the impact of the macro on our sector, and we will of course update you on that evolving landscape.
“Should there be a slowdown, we’ve shown that we’re capable of navigating challenging circumstances. We continue to provide services that marketers require in order to deliver sales and business outcomes regardless of where we are in the economic cycle.
“We also know that if the macro ultimately weighs on broader consumer sentiment and economic activity with a resulting impact to our revenue, we’ve consistently proven the benefits of our flexible cost model.
“We’ve also demonstrated our resilience in that we’ve rebounded strongly as we emerge from such cycles.”
IPG had previously indicated three significant client losses in 2024 would weigh on this year.
However, this impact was lessened in the March quarter by "sound" underlying performance, with notable growth at IPG Mediabrands, Deutsch and Golin, as well as at database marketing company Acxiom.
“We also began the year with significant progress on the transformational restructuring of our business — driving change within corporate functions and enhancing our service offerings in areas such as production and analytics through greater consolidation into centers of excellence,” said Krakowsky.
“The long-term financial benefits of our transformation will exceed our original estimates and therefore accrue to the newly merged company once our transaction with Omnicom is complete, given that there is almost no overlap between our current standalone efforts and the synergies that have been identified and communicated in connection with the integration of the two companies.”
March quarter 2025:
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