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The Interpublic Group Of Companies Management Discusses Q2 2012 Results - Earnings Call Transcript

In the U.K., we again had solid growth in Q2, while in Continental Europe, organic revenue decreased moderately due to continued macro challenges. Turning to the client sectors. We had growth during the quarter in auto and transportation, financial services and food and beverage. As expected, we had decreases in the tech and telecom and consumer goods category. It's worth noting that absent the loss of SC Johnson, the consumer goods category showed solid growth, a sign that our U.S. business is solid.

In health care, we continue to see industrywide softness due to patent expirations and regulatory uncertainty. Retail sector revenues in the quarter decreased due to some pullback from existing clients. These trends weighed particularly heavy on our U.S. revenue in the quarter.

For the year-to-date, we are net new business positive. I'll cover specific wins when I provide detail on the agencies in my closing remarks. But we've seen good results thus far this year in major pictures such as Bank of America, Unilever, as well as with good growth with current clients like Microsoft and General Motors.

While first half revenue growth is below our full-year objectives, we are targeting a stronger second half and our full-year objective continues to be 3% organic growth.

Moving to operating expenses and margin, our results continue to reflect careful and effective cost management, along with disciplined investment in the growth areas of our businesses, do talent acquisition and development as well as targeted M&A activity.

Q2 operating margin increased 30 basis points to 10.3%. For the first half of 2012, our operating margin was also up 30 basis points compared to a year ago. On a trailing 12-month basis, our operating margin increased to 9.9%, which is once again the highest level of 12-month profitability that IPG has posted in over a decade.

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