IPG Posts Significant Revenue Drop In Q4, Expects A Rosier 2021

IPG has reported better-than-expected fourth-quarter 2020 results to the end of December.

The US-based holding company posted net revenues of $US2.28 billion, however that was a overall decrease of 21.3 per cent compared to the same period last year.

The downside was caused by organic net revenues fall of 5.4 per cent and negative 0.8 per cent impact of net dispositions. Total revenues of $US2.55 billion declined by 12.1 per cent year on year.

On a more positive note, IPG’s shares have increased 13.1 per cent over 2020, compared to an industry average decline of 8.6 per cent.

Operating income in Q4 came in at $US223.4 million compared with $US491.3 million YOY. Operating margin on net revenues fell to 9.8 per cent from 20.2 per cent . Operating margin on total revenues fell to 8.8 per cent from 16.9 per cent from the same period 12 months ago.

Adjusted earnings before interest, taxes, and amortisation (EBITA) came in at $US244.9 million, compared with $US512.7 million at the end of 2019’s Q4. Adjusted EBITA margin on net revenues declined to 10.7 per cent from 21.1 per cent in the year-ago quarter. Adjusted EBITA margin on total revenues rose to 9.6 per cent from 17.6 cent from the same period last year.

As of December 21 2020, the agency had cash and cash equivalents of $US2.51 billion compared with $US1.63 billion at the end of the prior quarter. Total debt was $US3.47 billion compared with $US3.96 billion at the end of the prior quarter.

IPG revealed that its media and health businesses had weathered the COVID storm well; however, as expected, its events businesses had suffered from the pandemic.

Commenting on the results, newly appointed IPG CEO Philippe Krakowsky (main photo) said: “Last year, we did call out that the pandemic would have an impact on Q4 project spend. That played out to a much greater degree on the international side.”

Krakowsky said he “fully expects to return to positive growth over the course of the year” but there remains “significant uncertainty driven by macro conditions that are beyond any of our control.”

“The timing and magnitude of economic recovery clearly hinges on the resolution of the health crisis,” he added.

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ipg Philippe Krakowsky