Interpublic Group Hikes Dividend and Share Buyback Program

Andrew Klips  |

Advertising and marketing company Interpublic Group of Cos. (IPG) said Friday morning that earnings for the fourth quarter increased, largely on the back of the firm selling its remaining stake in Facebook, Inc. (FB), and that it was raising its quarterly dividend by 25 percent.  The company, which houses brands such as Draftfcb, FutureBrand, Erickson and more, also said that its board has authorized a new share repurchase program up to $300 million of its common stock.

Revenue during the fourth quarter contracted 0.4 percent to $2.06 billion from $2.07 billion in the year prior quarter.  Net income for the quarter rose to $316.2 million, or 68 cents per share, versus $261.9 million, or 50 cents per share, in the year prior quarter.  Excluding the impact of the Facebook transaction during the fourth quarter of 2012, diluted earnings per share was $0.56.

Wall Street analysts were expecting revenue of $2.07 billion and EPS of 53 cents.

In November, Interpublic Group sold its remaining 0.2 percent stake in Facebook for $95 million.  The company said it expects a pre-tax gain of $94 million from the sale.

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"2012 challenged us in terms of growth, due in large part to account losses suffered in 2011, but we demonstrated our ability to control expenses and drive significant value creation through our strong balance sheet and the return of capital to our owners. Our offerings are highly competitive and we are coming into this year in a much stronger position with respect to client retention and new business activity," said Michael I. Roth, Interpublic's Chairman and CEO, in a corporate statement.

Roth went on to say that emerging economies and digital capabilities are key growth areas for the company and that it will “remain vigilant” in controlling expenses as the company is stronger now than before with respect to client retention and new business activity.

The company raised its quarterly dividend from 6 cents to 7.5 cents per share, payable on March 25 to shareholders of record on March 11.

For the whole year 2012, revenue faded to $6.96 billion from $7.01 billion in 2011.  Net income available to IPG common shareholders was $435.1 million, or 94 cents per diluted share, compared to $520.7 million, or 99 cents per diluted share, in the year earlier.  Excluding any Facebook transactions from either year, EPS was 82 cents in 2012, up from 76 cents in 2011.

Across 2012, the company repurchased 32.7 million shares of its common stock for an aggregate amount of $350.5 million and paid $103.4 million in dividends (24 cents per share).

Shares of IPG closed Thursday at $12.25, down 1.8 percent.  Despite the “challenges” noted by Mr. Roth, shares have appreciated by about 16 percent in the past 52 weeks, including a new high of $12.68 on Monday.

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