Interpublic Group of Cos reported lower-than-expected quarterly results due to weak demand in Europe, and warned that the US shutdown could hurt the current quarter. Shares fell as much as 6.3 percent to $15.98 on Friday. Organic revenue growth from continental Europe dropped 5.9 percent in the third quarter, from a year earlier. The company said revenue declined from most economies in the region, except Germany.
The region accounted for 10 percent of the no. 2 US advertising company's revenue. "Macro conditions in Europe and our results in that region remained more challenging than had been expected at the outset of this year," CEO Michael Roth said in a statement. Larger rival Omnicom Group Inc on Tuesday reported a 1.6 percent drop in organic revenue from the euro area, led by Germany and France. The shutdown hurt organic growth in the United States by 100 basis points in the third quarter and could impact the current quarter also, Roth said on a conference call with analysts.
Revenue from the US grew about 4 percent to $976.6 million. Interpublic, home to advertising agencies McCann Erickson and Draftfcb, is considering cost cuts to expand operating margin in 2014 and beyond, Roth said in the statement. The company's operating margin rose to 8.3 percent from 7.9 percent a year earlier. Net income available to Interpublic's shareholders fell to $45.4 million, or 11 cents per share, from $68.7 million, or 15 cents per share. Excluding the impact of a debt extinguishment, the company reported a profit of 17 cents per share. The company said it recorded a loss of $45.2 million after it paid down its senior notes due 2017 during the quarter. Revenue rose about 2 percent to $1.70 billion. Analysts on average had expected earnings of 18 cents per share on revenue of $1.71 billion, according to Thomson Reuters I/B/E/S.
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