Friday, October 31, 2008

Slowdown, PR and corporates: Communications giants’ revenues hold the key?

Global communications giants Publicis Groupe, WPP, and The Interpublic Group (IPG) reported positive third quarter earnings results last week, but they predicted a future softening due to the down economy.

“In this context, we believe our industry will face a difficult end of 2008 and a marked slowdown in 2009,” Maurice Levy, CEO of Publicis, said in the earnings statement.

Publicis, which does not separate PR results, reported $1.39 billion in consolidated revenue for the third quarter ending September 30, a 5.1% revenue growth compared with Q3 2007, using constant exchange rates, reports Tonya Garcia in PRWeek.

WPP reported PR and public affairs revenues totaling about $347.7 million, up 9.3% from the year before. The results came amid reports that CEO Martin Sorrell ordered a hiring freeze across the company's subsidiaries. When asked to elaborate on the freeze, Howard Paster, EVP of WPP's PR and public affairs division, declined to comment.

IPG's Constituency Management Group (CMG) division (which contains the holding company's PR agencies), reported revenues of nearly $290 million for Q3 – an organic increase of 18.3% from the same period last year.

“I think it's fair to say that the PR business has had a terrific nine months and a terrific third quarter,” said Harris Diamond, CEO of WS and CMG. “Having said that, you have the caveat that we are walking into uncertain times.”

Larry Witt, a stock analyst at Morningstar that follows Omnicom, IPG, and WPP, called the results he had seen “surprising”. (Witt spoke with PRWeek before WPP's earnings were announced). He believes geographic diversification could be a variable that determines which companies will be hit hardest.

“We don't think these good results will continue in the next quarter or following quarters,” he said. “WPP is probably the most geographically diversified, with more revenue outside the US. IPG is probably the least diversified.”

In late October, Omnicom Group, which includes Fleishman-Hillard and Ketchum, reported a 1.2% dip in Q3 PR revenues.

Also see:

WPP Warns Of "Very Tough" 2009, 3Q Sales Up

Ketchum Acquires Fifth Largest U.S. Technology PR Firm, Access Communications


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