Advertising and marketing services provider Interpublic Group of Companies, Inc. (IPG) reported Thursday a sharp rise in second-quarter profit, attributable to better margins and a nearly 10% growth in revenues, driven by increased client spending and new business wins. Shares of the company are trading up by over 6% on the New York Stock Exchange.
For the second quarter, net income available to IPG common stockholders rose to $105.3 million from $20.9 million in the previous year. The results of the latest quarter included a benefit of $25.7 million related to the repurchase of preferred stock.
Net income attributable to Interpublic Group, excluding the benefit from the preferred shares transaction and dividends on preferred stock, advanced to $82.5 million from $27.8 million last year.
For the three-month period, the New York-base firm recorded earnings of $0.15 per share, up from $0.04 per share recorded a year earlier.
On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the second quarter. Analysts' estimate typically excludes special items.
Total revenues for the quarter grew 9.7% to $1.62 billion from $1.47 billion. Eleven analysts were expecting revenue of $1.51 billion for the second quarter.
Interpublic Group noted that foreign currency translation gains boosted revenue by 1.1% and the impact of net acquisitions was positive 0.1%. Organic revenue growth for the quarter was 8.5%, reflecting higher client spending and new business wins, the company noted.
Geographically, revenue from the U.S grew 13.4% to $961 million and from International markets improved 4.7% to $656.8 million.
Commenting on the results, Michael Roth, Interpublic's chief executive, said, "Contributions to our organic revenue growth came from existing and new clients across a range of industry sectors, from the U.S. and emerging international markets and from a broad cross-section of the agencies in our portfolio."
For the second quarter, operating income went up 82.9% to $177.2 million, as operating margin climbed to 11% from 6.6% in the past year. The firm indicated that a decline in severance expenses helped reduce operating expenses.
Looking ahead to the full year, the company said it continues to expect an operating margin of better than 8%, citing revenue stability and growth.
IPG is currently trading at $8.75, up $0.50 or 6.06%, on the NYSE.
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