said the sharp decline in sales caused by the coronavirus pandemic eased somewhat in the third quarter, but warned that budget cuts and a decrease in demand for marketing services will continue to weigh on its business.
The New York-based advertising holding company, which owns agencies including BBDO, DDB and OMD, Tuesday said world-wide revenue in the third quarter decreased 11.5% to $3.21 billion from $3.62 billion in the same period a year earlier.
That showed an improvement from the 24.7% drop in second-quarter revenue Omnicom reported in July. But Omnicom Chief Executive Officer John Wren highlighted continuing uncertainty, especially in the period ahead of the festive season when advertisers tend to boost spending.
“I don’t have any clues to how Christmas will work out,” said Mr. Wren during an earnings call, pointing to a sharp rise in coronavirus cases in recent weeks and tightened public-health measures in Europe.
Omnicom’s world-wide organic revenue—a key metric that strips out currency effects and acquisitions—decreased 11.7%, driven in part by steep declines at two customer relationship marketing divisions. Organic revenue decreased 11.4% in the U.S., 12.5% in the U.K. and 9.6% in European markets.
“The reduction in our revenue continued during the second and third quarters of 2020 and is expected to continue for the remainder of the year,” the company said in its release.
“There is always some uncertainty regarding project work and year-end spend,” said Omnicom Chief Financial Officer Philip Angelastro during the call. “That’s certainly the case this year. We’re probably not as optimistic that will come through as we were at this time last year.”
Omnicom’s shares were down around 2.8% at $49.89 each in morning trade.
Omnicom said it slashed costs in the third quarter, in part through reimbursements and tax credits under programs such as the Coronavirus Aid, Relief and Economic Security Act, known as the Cares Act, in the U.S.
Operating profit increased by 5.9% to $501.4 million from $473.3 million last year.
The company said it signed up new clients including advocacy group AARP and Cox Automotive Inc.
Write to Alexandra Bruell at [email protected]
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