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Omnicom Group Inc. Reports Operating Results (10-K)

February 17, 2012 | About:
10qk

10qk

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Omnicom Group Inc. (OMC) filed Annual Report for the period ended 2011-12-31.

Omnicom Group Inc. has a market cap of $13.12 billion; its shares were traded at around $48.42 with a P/E ratio of 14.9 and P/S ratio of 1.1. The dividend yield of Omnicom Group Inc. stocks is 2.1%. Omnicom Group Inc. had an annual average earning growth of 8.1% over the past 10 years. GuruFocus rated Omnicom Group Inc. the business predictability rank of 4-star.

Highlight of Business Operations:

We analyze revenue growth by reviewing the components and mix of the growth, including growth by major geographic location, growth by major marketing discipline, growth from currency fluctuations, growth from acquisitions and growth from our largest clients. In recent years, our revenue has been generally balanced between our domestic and international operations. Revenue in 2011 increased 10.6% compared to 2010, of which 6.1% was organic growth, 2.6% was related to changes in foreign exchange rates and 1.9% was related to acquisitions, net of dispositions. Across our geographic markets revenue increased 5.5% in the United States, 12.5% in the United Kingdom, 4.9% in our Euro markets and 30.7% in our other markets, primarily Asia and Latin America. The increase in revenue in 2011 compared to 2010 in our four fundamental disciplines was: advertising 12.7%, CRM 11.4%, public relations 6.0% and specialty communications 1.6%.

Salary and service costs tend to fluctuate in conjunction with changes in revenue. Salary and service costs increased 11.2% in 2011 compared to 2010, reflecting growth in our business, as well as an increase in severance of approximately $100 million to $201 million, including our repositioning actions in the first quarter of 2011. The increase in salary and service costs was partially offset by the associated cost savings from these head count reductions.

Office and general expenses are less directly linked to changes in revenue than salary and service costs. Office and general expenses increased 4.4% in 2011 compared to 2010, reflecting a decrease of $123.4 million related to the non-cash remeasurement gain recorded in the first quarter of 2011 in connection with the acquisition of the controlling interest in the Clemenger Group partially offset by $38.5 million of charges taken in the first quarter of 2011 related to our repositioning actions. Excluding the impact of the remeasurement gain and the impact of the repositioning actions, office and general expenses increased by 9.0% in 2011.

Due to a variety of factors, in the normal course, our agencies both gain and lose business from clients each year. The net result in 2011 was an overall gain in new business. Under our client-centric approach, we seek to broaden our relationships with our largest clients. Revenue from our largest client represented 2.6% and 3.0% of our revenue in 2011 and 2010 respectively. No other client represented more than 2.1% of revenue in 2011 or more than 2.4% of revenue in 2010. Our ten largest and 100 largest clients represented 18.0% and 50.3% of our 2011 revenue, respectively and 18.0% and 50.6% of our 2010 revenue, respectively.

Office and general expenses are less directly linked to changes in our revenue than salary and service costs. Office and general expenses increased 4.4% in 2011 compared to 2010, reflecting a decrease of $123.4 million related to the non-cash remeasurement gain recorded in connection with the acquisition of the controlling interest in the Clemenger Group in the first quarter of 2011, partially offset by $38.5 million of charges related to our repositioning actions in the first quarter of 2011. Excluding the net decrease of $84.9 million related to the remeasurement gain and the charges for our repositioning actions,

Read the The complete Report

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