Omnicom is well advanced in its planned asset divestments as the global advertising company works to improve organic growth by shedding businesses it considers surplus after the acquisition of IPG.
CFO Phil Angelastro said close to 60% of the businesses intended for sale have been sold, representing between $3.5 billion and $3.6 billion in annual revenue.
"We're pretty satisfied with the progress we've made in completing the dispositions so far through the end of this month (July)," Angelastro told analysts during a briefing on June quarter results.
"We're going to continue to aggressively pursue the completion of the remaining transactions."
“We’re on track right now to complete all of those dispositions by the time we get to year-end.”
Omnicom has disposed of agencies in several small, low-growth markets where it no longer needed multiple agencies serving the same clients.
The advertising division revenue fell by a “high” single digit percentage in the June quarter, reflecting internal restructuring, part of the IPG integration, rather than weaker client demand.
CEO John Wren said the company had disposed of more than $2 billion of assets in the first seven months of the year.
"I think we've done an outstanding job," Wren said.
Two remaining assets were still under review, with no final decision yet made on whether Omnicom would retain or sell them.
"There still remains two assets, which are not going to seriously affect any of the information that we've given you, that we have under consideration," he said.
"We haven't made a final decision six months into the deal as to whether we're going to keep them long-term or not keep them long-term.
“That’ll depend on a lot of factors, and a lot is the amount of money we’re going to get for them if we do decide to get rid of them. "
“We’re always looking at the portfolio and always making adjustments. Sometimes they’re internal, and you don’t see them, and other times you do.”
He said the businesses targeted for sale had been dragging the group's organic growth figures before their removal.
"Many of the companies that we had identified for sale were actually bringing us down in many quarters in terms of what our organic growth was," Wren said.
Angelastro said Omnicom had received $168 million in proceeds from asset sales through to the end of June, with a further $200 million-plus expected from sales completed in July.
Wren said he expected the divestment program to stop featuring in the company's quarterly reporting once complete.
"Next year, with any good luck, we won't be discussing this any longer," he said.
Omnicom, posted organic revenue growth of 6.1% to just under $US6 billion in the June quarter for core operations, excluding those businesses marked for sale.
On the back of that result, the company raised full year organic revenue growth guidance to 5% from 4% to 4.5%.
The company, now the world’s biggest advertising holding company, has a target of $US1.5 billion in savings from the takeover of IPG, starting with $US900 million this year.
So far this year, the company is a “little over” halfway through the $900 million.
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