IPG posts Q4 2015 revenue of $2.20 billion

The Interpublic Group has reported $2.20 billion revenue in the fourth quarter 2015, compared to $2.21 billion in the fourth quarter of 2014, with an organic revenue increase of 5.2 per cent, compared to the prior-year period. This comprised an organic revenue increase of 4.1 per cent internationally and 6.2 per cent in the US.

Full year 2015 revenue stood at $7.61 billion, compared to $7.54 billion in 2014, with an organic revenue increase of 6.1 per cent, compared to the prior-year period. This comprised an organic revenue increase of 5.3 per cent internationally and 6.8 per cent in the US.

Operating Results

Operating income in the fourth quarter of 2015 was $456.4 million, compared to $433.0 million in 2014. Operating margin was 20.8 per cent for the fourth quarter of 2015, compared to 19.6 per cent for the fourth quarter of 2014.

For the full year 2015, operating income was $871.9 million, compared to $788.4 million in 2014. Operating margin was 11.5 per cent for the full year 2015, compared to 10.5 per cent for the full year 2014.

Losses on Sales of Businesses

For the fourth quarter of 2015, other expense (non-operating) includes pre-tax losses of $12.0 million due to sales of businesses, resulting in a negative impact of $0.03 per diluted share.

For the full year 2015, other expense (non-operating) includes pre-tax losses of $50.0 million due to sales of businesses in the third and fourth quarters, resulting in a negative impact of $0.12 per diluted share.

Net Results

Full year 2015 net income available to IPG common stockholders was $454.6 million, resulting in earnings of $1.11 per basic and $1.09 per diluted share. This compares to net income available to IPG common stockholders of $477.1 million, or $1.14 per basic and $1.12 per diluted share a year ago.

Excluding the impact of the loss on sales of businesses recorded during the third and fourth quarters of 2015, diluted earnings per share was $1.21 in 2015. Excluding the impact of the net valuation allowance reversal of $67.6 million on deferred tax assets in Continental Europe in the fourth quarter of 2014 and the charge for early extinguishment of the 6.25 per cent Senior Unsecured Notes due 2014 in the second quarter of 2014, diluted earnings per share was $0.98 in 2014.

Fourth quarter 2015 net income available to IPG common stockholders was $260.3 million, resulting in earnings of $0.65 per basic and $0.63 per diluted share. This compares to net income available to IPG common stockholders of $308.9 million, or $0.75 per basic and $0.73 per diluted share a year ago. Excluding the impact of the losses on sales of businesses, diluted earnings per share was $0.66 in 2015, compared to $0.57 in 2014 excluding the impact of the net valuation allowance reversal on deferred tax assets in Continental Europe.

Michael Roth, Chairman and CEO, IPG, commented, “From every perspective, 2015 was a very successful year, with notable accomplishments in the marketplace and strong financial results. Across the group, the quality of our people and our offerings is at its highest level in well over a decade. The key drivers of our industry-leading organic revenue performance have been talent acquisition and development, particularly in creative and strategic roles, our ‘open architecture’ model of integrating services, as well as the deep digital expertise we have embedded into our agencies.”

He further said, “We are targeting organic growth of 3-4 per cent and an additional 50 basis points or more of margin improvement, which would bring us to operating margin performance of 12.0 per cent or greater. Coupled with strong capital returns, we are confident that achieving these targets will allow us to build on our strong track record of enhancing shareholder value.”

Operating Results

Revenue

Revenue of $7.61 billion for the full year 2015 was up 1.0 per cent compared to 2014. During the full year 2015, the effect of foreign currency translation was negative 5.4 per cent, the impact of net acquisitions was positive 0.3 per cent, and the resulting organic revenue increase was 6.1 per cent.

Revenue of $2.20 billion in the fourth quarter of 2015 was down 0.5 per cent compared with the same period in 2014. During the fourth quarter of 2015, the effect of foreign currency translation was negative 5.5 per cent, the impact of net divestitures was negative 0.2 per cent, and the resulting organic revenue increase was 5.2 per cent.

Operating Expenses

For the full year 2015, salaries and related expenses were $4.86 billion, up 0.8 per cent compared to 2014. After adjusting for currency effects and the impact of net acquisitions, salaries and related expenses increased 5.6 per cent organically.

During the fourth quarter of 2015, salaries and related expenses were $1.24 billion, down 2.5 per cent compared to the same period in 2014. After adjusting for currency effects and the impact of net divestitures, salaries and related expenses increased 2.3 per cent organically.

Non-Operating Results and Tax

For the full year 2015, net interest expense of $63.0 million increased by $5.5 million compared to 2014. In the fourth quarter of 2015, net interest expense of $18.3 million increased by $4.0 million, compared to the same period in 2014.

Other expense, net was $46.7 million for the full year 2015, and was $10.3 million for the fourth quarter of 2015, primarily due to losses recorded during the third and fourth quarters on sales of businesses.

The income tax provision for the full year 2015 was $282.8 million on income before income taxes of $762.2 million, compared to a provision of $216.5 million on income before income taxes of $720.7 million in 2014.

 

@adgully

News in the domain of Advertising, Marketing, Media and Business of Entertainment

More in