“Billion-Dollar John” reported today that earnings at the ad/PR combine shattered the $1B mark in '08. Net was up a paltry 2.5 percent, far below OMC’s double-digit growth rates of past years.
BDJ says OMC’s growth was constrained by the most challenging fourth quarter that the combine has faced since '92. OMC's PR unit, which includes Fleishman-Hillard, Ketchum, Porter Novelli, Brodeur, Clark & Weinstock and Gavin Anderson, bears that out. Those units ran into a buzz saw during Q4 as revenues tanked 10.2 percent. For the year, PR dipped 0.4 percent.
Things could have been worse for OMC had not BDJ swung the ax, or in his words, launched an “aggressive severance action,” which took out $215M in costs and five percent of OMC staff. Those 3,000-plus people are remembered by a $55M severance charge.
BDJ sees tough sledding ahead. He used the “most difficult” phrase to describe the outlook for the business during the first three quarters of the year. Things are supposed to heat up a bit by Q4 and really get percolating in 2010 as the president’s stimulus package kicks in.
BDJ remains watchful. He isn’t sure whether any more heads will roll this year, warning of the possible need for “surgical” cuts. Wren says OMC should be able to “outperform” global domestic product.
That really isn’t saying much these days.
(Photo: BusinessWeek)