Omnicom Group Management Discusses Q2 2012 Results - Earnings Call Transcript

Omnicom Group (OMC)

Q2 2012 Earnings Call

July 17, 2012 8:30 am ET


Randall J. Weisenburger - Chief Financial Officer and Executive Vice President

John D. Wren - Chief Executive Officer, President and Director


Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

John Janedis - UBS Investment Bank, Research Division

Craig Huber

Leo Kulp - Citigroup Inc, Research Division

James G. Dix - Wedbush Securities Inc., Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

William G. Bird - Lazard Capital Markets LLC, Research Division

Peter Stabler - Wells Fargo Securities, LLC, Research Division

Tim Nollen - Macquarie Research

Daniel Salmon - BMO Capital Markets U.S.



Ladies and gentlemen, thank you for standing by. Welcome to the Omnicom Second Quarter 2012 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I'd now like to introduce you to today's conference call host, Executive Vice President and Chief Financial Officer of Omnicom Group, Mr. Randall Weisenburger. Please go ahead.

Randall J. Weisenburger

Good morning. Thank you for taking the time to listen to our second quarter 2012 earnings call. We hope everyone's had a chance to review our earnings release. We have posted to our website both the press release and a presentation covering the information that we'll be presenting this morning. This call is also being simulcast and will be archived on our website.

Before we start, I've been asked to remind everyone to read the forward-looking statements and other information that's included at the end of our investor presentation and to point out that certain of the statements made today may constitute forward-looking statements and that these statements are our present expectations, and actual events or results may differ materially.

I'd also like to remind you that during the course of the call, we will discuss some non-GAAP measures in talking about our performance. You can find a reconciliation of those measures to the nearest comparable GAAP measures in the presentation materials.

We're going to begin the call with some brief remarks from John Wren. Following John's remarks, we'll review our financial performance for the quarter, and then both John and I will be happy to take questions.

John D. Wren

Good morning, and thank you for joining us on the call. I'd like to spend my time this morning by starting with our latest business results, give you my thoughts on the current environment and discuss our expectations for the rest of 2012.

I'm happy to say that we had another strong quarter, especially when you consider some of the economic headwinds out there. We continue to deliver above average organic growth, and we remain very much on track to achieve our margin objectives for the year.

For the second half, we are cautiously optimistic about revenues. We recognize that there are risks in a number of regions that could impact global growth. On the risk side, the situation in Europe remains tenuous. In the U.S., continuing fiscal concerns, unemployment and the upcoming elections create uncertainty. In Asia, even though overall growth is still quite attractive, the pace of their economic growth is also moderating. On the plus side, central banks in the U.S., Europe and Asia are acting in a manner that supports growth. And in our conversations with our clients, their focus remains on building their businesses around the world.

We continue to keep an eye on the macroeconomic picture, but as I said last quarter, we are most focused on the things we can control. Even as we tightly manage our costs, we are making smart investments in our people, our service capabilities and our geographic footprint. These investments don't always make headlines themselves, but they are helping us to consistently win new business and to extend our existing client relationships.

Across all of our networks and agencies, we are investing in talented people who are helping us to broaden our capabilities and service offerings and to fulfill our commitment to differentiating creative and executional excellence on behalf of our clients. This was most recently illustrated by our outstanding performance at the International Festival of Creativity in Cannes, where Omnicom agencies from 34 countries won more than 200 Lions, representing over 90 clients. I want to congratulate all of our agencies on their performance.

The future of our industry belongs to those organizations that can deliver integrated solutions for clients. The marketplace is getting more complex. Consumers are blurring the lines between offline and online. New technologies offer greater opportunities to effectively communicate with customers, and in my opinion, we're only at the beginning. We are just learning how to effectively utilize social media and smartphone technology.

To be successful, agencies must increasingly blend all these media, together with a deep understanding of data and analytics, to help their clients find and serve customers where they are and the way they want. And our agencies must be agile enough to keep learning and changing as technology does. Our entire digital strategy is built around this idea: build the expertise in every agency, make sure we are not weighted to any single technology and integrate these capabilities to better service our clients.

In a recent example of our approach, in late June, TBWA announced the formation of the Digital Arts Network. Digital Arts Network unifies TBWA's proven digital talent, encompassing over 700 digital specialists in the network and initially rolling it out in 18 markets, a global footprint to rival any pure play digital shop. This talent will remain fully integrated within TBWA's existing business.

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