Omnicom Group Inc., one of the world's largest advertising and marketing conglomerates, reported a 21 percent decline in its first-quarter profit on Monday, but still beat Wall Street expectations. Its shares rose more than 3 percent in afternoon trading.
John Wren, Omnicom's chief executive, said major clients cut back on their marketing spending across the board, with the top decline coming from the automotive sector and especially Chrysler LLC.
But he also told analysts in a conference call that optimism is emerging that the economy could be turning positive.
"People are encouraged and are hopeful that we are in a bottoming out period right now, that the worst is over," he said. "Cautious optimism prevails with most major clients."
But they don't expect any upturn, if it arrives, until the end of the year or early next year, he said.
Omnicom reported a profit of $164.5 million, or 53 cents per share, in the first quarter compared with $208.7 million, or 64 cents, in the same period a year earlier.
Worldwide revenue fell to $2.75 billion from $3.2 billion.
Analysts polled by Thomson Reuters, on average, predicted a profit of 44 cents on revenue of $2.68 billion.
Slightly more than half of the 14 percent decline in revenue was due to a strong dollar, as overseas units earned in local currencies that were converted into U.S. dollars. Omnicom attributed the rest of the revenue drop to the ad slump, especially in developed nations.
Domestic revenue fell 7.8 percent to $1.5 billion while international revenue was down 21 percent to $1.2 billion.
Omnicom provides advertising, marketing, public relations and other services to more than 5,000 clients in 100 countries.
Shares of Omnicom rose $1.05, or 3.6 percent, to $30.42 in afternoon trading Monday.