Omnicom’s Q3 2012 revenues grew only 0.8% to $3.4 billion — pretty feeble, for the holding company that owns ad agencies such as BBDO, TBWA, and DDB.Investors didn’t like that news, and the stock dropped 3% today in reaction.
Omnicom’s growth has been slowing for a year, along with its peers.
So why couldn’t Omnicom grow its business in Q3?
The answer has two parts: Currency fluctuations killed off a bunch of Omnicom’s sales growth, and Europe still sucks.
Here’s Omnicom’s “organic” (meaning like-for-like not counting acquisitions) growth by region:
- Organic growth
- US: 3.1%
- Eurozone: -1.8%
- UK: -0.1%
- ROW: 10.2%
Business is great everywhere — except Europe, where it’s lousy. The euro lost roughly 2% of its value against the dollar in Q3. Currency fluctuations essentially wiped out any organic growth Omnicom received elsewhere.
Long story short: Omnicom is treading water because anything good its agencies do in the U.S. and the rest of the world is immediately cancelled out by currency changes and the decline of Europe:
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