(Reuters) – U.S. advertising company Omnicom Group Inc beat Wall Street estimates for fourth-quarter profit on Tuesday, as higher advertisement spending by businesses in Europe offset the impact of a strong dollar.
Shares of the company, which initially rose more than 3 pct, reversed course to last trade 1 percent lower at $73.06.
Omnicom also posted a 3.2 percent rise in organic revenue – a widely watched measure that excludes fluctuation in foreign exchange rates and mergers. Analysts on average had expected a 3.3 percent rise in organic revenue, according to research firm FactSet.
Counted among the world’s “Big Four” traditional ad companies, Omnicom faces competition from consulting firms such as Accenture Plc, IBM Corp and Deloitte, as well as internet giants like Alphabet Inc’s Google and Facebook Inc.
The company has been shifting focus to high-growth digital marketing through a host of recent acquisitions in a move to better compete with Google and Facebook, which have a sizable chunk of the online advertising market.
Organic revenue rose 5.7 percent in Europe and 2.6 percent in the United States, which accounts for more than 52 percent of Omnicom’s total revenue.
U.S. sales were higher on better-than-expected year-end project spend as well as spending related to the midterm elections, Chief Executive Officer John Wren told analysts on a conference call.
Net income available for common shares rose to $399.2 million, or $1.77 per share, in the quarter ended Dec. 31, from $254.1 million, or $1.09 per share, a year earlier.
Analysts on average had expected earnings of $1.66 per share, according to IBES data from Refinitiv.
Revenue fell 2.2 percent to $4.09 billion, marginally below analysts’ estimates of $4.1 billion.
Reporting by Munsif Vengattil in Bengaluru; Editing by James Emmanuel