Good morning, ladies and gentlemen. Welcome to the Omnicom Fourth Quarter 2019 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

At this time, I’d like to introduce your host for today’s conference, Senior Vice President of Investor Relations, Shub Mukherjee. Please go ahead..

[Technical Difficulty] Chairman and Chief Executive Officer; and Phil Angelastro, Chief Financial Officer. We hope everyone has had a chance to review our earnings release. We have posted to www.omnicomgroup.com this morning’s press release along with the presentation covering the information that we will review this morning.

This call is also being simulcast and will be archived on our website.

Before we start, I’ve been asked to remind everyone to read the forward-looking statements and other information that we have included at the end of our presentation, and to point out, that certain of the statements made today may constitute forward-looking statements and that these statements are our present expectation and that actual events or results may differ materially.

I would also like to remind you that during the course of the call, we will discuss some non-GAAP measures in talking about Omnicom’s performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures in the presentation material.

We are going to begin this morning’s call with an overview of our business from John Wren, then Phil Angelastro will review our financial results for the quarter, and then, we will open the line for your questions..

healthcare professionals, payer organizations, patients and consumers, and medical experts and regulatory stakeholders. The group’s success is driven by its talent. In 2019, the group added 300 healthcare specialists to its roster, which now numbers more than 4,300 people.

Omnicom Health Group has invested in training and up-skilling its people in healthcare marketing through programs such as its Oncology University. The group’s success is also due to its use of our data and analytical tools.

Over the past year, it has begun to use Omni, our people-based precision marketing and insights platform, to better understand healthcare professionals and patients’ online behavior. In doing so, Omnicom Health Group has successfully created more insightful, targeted and personalized communication strategies for its clients.

All our agencies have access to our data and analytics tools, which we’ve invested in for over a decade. Omni is now available globally in the majority of markets in which we operate. Omni’s open platform allows us to continually evolve and expand its capabilities to serve the specific needs of our agencies and clients.

As an example, our pioneering cultural consultancy, sparks & honey, recently launched Q, the first of its kind SaaS platform that combines human and AI-powered intelligence to help organizations predict change before it disrupts their business. The capabilities of Q are fully embedded within Omni.

While data and analytics remain a top investment priority for us, we understand that data can only take us so far. It is our IP, our creativity that truly sets us apart. It is creativity and innovation, informed by data and analytics that will drive the most meaningful business results.

One barometer we use to measure our success in cultivating the best talent in the strength of our agency brands is the performance of our client work and award shows. Here are a few recent highlights. Omnicom was named Holding Company of the Year by MediaPost for the second year in a row, while BBDO won Agency of the Year.

The Eurobest 2019, 2 of our networks were in the top 3, with BBDO coming in first and DDB coming in third. In addition, Abbott Mead Vickers BBDO took the top spot for Agency of the Year and DDB Paris came in second. PHD also won Media Network of the Year for the second in a row.

Critical Mass was named Customer Engagement Agency of the Year and Campaign U.S. Agency of the Year award. In the PRWeek’s inaugural Purpose Awards, Porter Novelli was named Agency of the Year. None of these awards would have been possible without our top notch agency brands.

The rich history and well established cultures have shaped our industry for decade, and we applaud the award winning work they create year-after-year for our clients. We remain steadfast in believing in the value of our individual brands, and we’ll continue to support their unique cultures and go-to-market strategies.

It is the people within our agencies, who make Omnicom what it is today. And our commitment to attracting, retaining and developing talent remains our top priority. This includes fostering diverse and inclusive workplaces, where all employees feel comfortable, confident and supported.

While this is a longstanding and continuous effort, 2019 set several milestones that highlight our dedication and commitment. In 2019, we were recognized Fortune Magazine as one of only 6 Fortune 500 companies that have more women than men on its Board of Directors.

The Wall Street Journal also recently released its own diversity and inclusion ranking of companies in the S&P 500, and I’m proud to say that we were tied for third. In addition, Omniwomen, our employee resource group, continue to serve as a catalyst for increasing the influence and number of women leaders throughout the Omnicom network.

The program currently has 14 chapters globally and we’ll be hosting several events across the globe in honor of the upcoming International Women’s Day on March 8. In May 2019, we launched OPEN DisAbility + Allies.

The launch of this group when hand-in-hand with our ongoing strategic partnership with The Valuable 500, a global initiative putting disability inclusion on business leadership’s agenda.

Finally, for the 4th consecutive year, Omnicom received a perfect score on the Corporate Equality Index conducted by the Human Rights Campaign, which highlights our commitment to an inclusive work force and designates us as a 2020 Best Place to Work for LGBTQ Equality.

I’m extremely proud of our leadership teams and all our people for these achievements. In addition to our employee resource groups, we continue to invest in our talent development programs. In December, we announced the appointment of Karen van Bergen as Dean of Omnicom University, our longstanding management development program.

Karen previously served as CEO of Omnicom’s PR Group. 2019 marked the 25th anniversary of this prestigious program. From its modest beginnings in Boston with only one program, we’ve expanded Omnicom University to 12 programs a year on 3 continents with nearly 5,400 global alumni.

It is considered one of the preeminent professional development programs in our industry. Our strong financial performance underpins the outstanding work of our people and agencies. We look forward to continued success in the year ahead.

In closing, we’re pleased with our performance for Q4 and the full year 2019, and I’m confident that we are well positioned as we enter 2020. I will now turn the call over to Phil for a closer look at the results..

we issued €500 million of 8-year senior notes due in 2027 at an effective rate of 0.92%; and an additional €500 million of 12-year senior notes due in 2031 at an effective rate of 1.53%.

Together, the euro note issuance after deducting the underwriting discount and offering expenses, resulted in net proceeds of US$1.1 billion at an average rate of 1.23%.

Proceeds were used to retire the $500 million of 6.25% 2019 senior notes, which came due in mid-July and to retire on August 1, $400 million of 4.45% 2020 senior notes through a partial redemption.

As a result of the refinancing activities, our expected ongoing long-term debt portfolio will be comprised of $4 billion in dollar-denominated debt and €1 billion in euro-denominated debt. In addition, with the drop in long-term interest rates, we settled our fixed-to-floating rate interest swaps for a small gain.

As a result, our debt portfolio is now 100% fixed rate debt at very attractive rates, an effective rate of approximately 3.3%. And total third-party interest expense for the fourth quarter decreased by $15.2 million when compared to Q4 of 2018.

In addition, interest income decreased $1.8 million period-over-period with the reduction in interest rates on our cash deposits over the past year more than offset the increase in our cash balances.

When compared to the third quarter of 2019, interest expense decreased $10.8 million driven by the refinancing activity in the third quarter, while interest income was flat.

Note, gross interest expense in Q4 was approximately $7.6 million lower than in Q3, because Q3 included incremental net interest expense recorded as a result of the early redemption of $400 million of the 2020 senior notes.

For the full year 2020, we expect net interest expense savings of approximately $20 million primarily from the refinancing activity when compared to 2019’s reported results. However, total interest expense for 2020 and going forward will be subject to changes due to the translation of interest expense into U.S.

dollars related to the euro notes that we issued in 2019. Our effective tax rate for the fourth quarter was 26.1%, bringing the 2019 full year effective tax rate to 26%. As previously discussed, the annual rate for 2019 includes a benefit of approximately $11 million, resulting from the favorable settlement of uncertain tax positions in Q2 of 2019.

Heading into 2020, we expect our effective tax rate to be in the range of 26.5% to 27%. Before considering the impact of the tax effect from our share-based compensation including the impact of any future stock option exercises, both of which is subject to changes in the value of Omnicom’s stock price.

Earnings from our affiliates were less than $1 million for the quarter, down versus Q4 of last year, primarily due to lower earnings at our affiliates as well as the negative impact of FX.

And the allocation of earnings to the minority shareholders and our less-than-fully-owned subsidiaries was up $4.3 million to $34.8 million during the quarter due to the strong performance from several of our less-than-fully-owned agencies.

As a result, net income for the fourth quarter was $415 million, up 4% or $15.8 million when compared to Q4 of 2018. Now turning to Slide 2, our diluted share count for the quarter decreased 2.8% versus Q4 of last year to 219.3 million shares.

As a result, our diluted EPS for the fourth quarter was $1.89, which is an increase of $0.12 or 6.8% when compared to our Q4 EPS for last year. Next, I’ll provide a quick recap of the summary P&L, EPS and other information for the full year results.

As a reminder, in the third quarter of 2018, we closed on the disposition of Sellbytel as well as other dispositions that resulted in a net pre-tax gain of $178 million. At the time, we also recorded charges of $149 million for repositioning actions primarily resulting from severance and lease terminations.

And lastly, we recorded additional tax expense of approximately $29 million, resulting from adjustments of the provisional amounts originally recorded in connection with the 2017 Tax Act.

As we reported last year, the net impact of these items on our full year 2018 results increased our reported operating profit by $29 million, net income by $18.2 million and diluted earnings per share by $0.08.

Therefore on Slide 5 and 6, we presented the fiscal 2019 results in comparison to 2018, both with and without the impact of the net gain from dispositions, the repositioning charges and the tax adjustments in connection with the Tax Act.

The non-GAAP adjusted amounts for these items show how our underlying business performed year-on-year on a comparable basis, which we believe this meaningful presentation for investors and is consistent with how management measured our 2019 operating performance.

Since the full year results for 2019 were in line with our quarterly performance, I’ll just give you a few headlines. Organic revenue growth for the full year was 2.8%, which was in line with the upper range of our expectations for the year of between 2% and 3%. FX translation decreased revenue by 2.1%.

The net impact of acquisitions and dispositions reduced revenue by 2.9%. So for 2019, our reported revenue totaled $14.95 billion, a decrease of 2.2% compared to 2018.

Our reported operating profit for 2019 was $2.12 billion, down slightly when compared to our reported results last year, while operating margin improve 20 basis points year-over-year to 14.2% on a reported basis and 40 basis points after adjusting 2018’s operating income with a net gain from the dispositions and repositioning actions we undertook during Q3 of 2018.

And our full year reported diluted EPS for 2019 was $6.06 a share, up $0.23 or 3.9% compared to the reported amount of $5.83 a share in 2018.

Adjusting for the impact of 2018’s net gain from the dispositions, repositioning actions and tax reform activity, 2019’s diluted EPS represents of $0.31 improvement or 5.4% over the 2018 non-GAAP adjusted amount of $5.75 a share. Turning to the details of our revenue performance in the fourth quarter.

Starting on Slide 7, FX once again was negative in the quarter, but not as negative as the impact we saw in the first 9 months of the year. FX reduced revenue by 0.9% in the fourth quarter or $37 million. This impact remains fairly wide spread.

On a reported basis consistent with the year-over-year impact, dollar strengthened against practically every one of our major foreign currencies. In the quarter, only the Japanese yen and Russian ruble strengthened against the dollar.

The FX movements creating the largest reductions in the quarter continue to be from changes in the dollar compared to the euro, Chinese yuan, Brazilian real and the Australian dollar.

As for our projection of the FX impact for the upcoming year, any assumption on how foreign currency rates will move over the next few months, let alone the balance for 2020, this point is speculative.

But if currencies stay where they currently are, based on our estimates, FX could reduce our reported revenues by approximately 50 basis points in the first quarter and be slightly negative over the balance of 2020. The impact of our recent acquisitions, net of dispositions, decreased revenue by $51 million in the quarter or 1.2%.

This is lower than earlier quarters, as we cycle through much of our recent disposition activity during the third quarter of 2019.

Based on transactions completed to date, we estimate the impact of our acquisition activity, net of dispositions will be a net reduction of about 75 basis points in the first quarter of 2020 and close to flat over the remaining 3 quarters of the year, resulting in a projected net negative impact of 25 basis points for the year.

Finally, our organic growth for the quarter was 3.5%, growth this quarter was fairly well distributed and reflective of the positive effects of year-end client project spending. Geographically, our domestic, Asia-Pacific and European regions all had good performances.

Within our service disciplines, our Advertising, Media and CRM Consumer Experience agencies, all experienced positive organic growth this quarter. All our CRM Execution & Support and PR agency group once again lagged. Slide 8 shows our mix of business by discipline.

For the fourth quarter, the split was 58% for advertising and 42% for marketing services. As for their organic growth by discipline, our advertising discipline was up 5.1%. We saw solid performances from our global advertising agency networks and several of our regional brands as well as solid performance at our Media businesses.

CRM Consumer Experience was up 3.3% organically, driven by continued strong growth from our precision marketing agencies as well as from our events businesses outside the U.S. CRM Execution & Support was down 6% this quarter across most of the service offerings and discipline. PR was down 2.5%.

The reduction is consistent with the performance of our PR discipline throughout earlier quarters in 2019. Lastly, Healthcare was up double digits organically at 12.9%. And the growth continues to be well distributed, both domestically and internationally.

On Slide 9, which details the regional mix of business, you can see during the quarter the split was 52% in the U.S., 3% for the rest of North America, 9% in the UK, 19% for the rest of Europe, 11% for Asia-Pacific, 3% for Latin America and 3% for the Middle East and Africa markets. Turning to the details of our performance by region on Slide 10.

Organic revenue growth in the fourth quarter in the U.S. was 2.8% led by our CRM Consumer Experience, Healthcare and Advertising and Media disciplines, with our CRM Execution & Support and PR agency group lagging.

Outside the U.S., our other North American agencies were down 2.3% due to the sluggish performances at our Advertising and Media businesses. Our UK agencies were once again positive, up 3.3% driven by the strong performance of our Advertising, PR, Healthcare and field marketing agencies. The rest of Europe was up 4.7% organically in the quarter.

In the euro zone, we saw solid performance across most markets, the strongest being Germany, Belgium, Portugal and Spain. The Netherlands was slightly positive in the quarter, while France was once again negative, driven by continued weak performance in a few of our CRM Execution & Support businesses in that market.

Organic growth outside the euro zone also continues to be positive across most markets. Organic growth in Asia Pacific for the quarter was 4.5%. Our Greater China agencies performed well this quarter, after coming off a poor performance in Q3, primarily driven by growth from our Media and Events agencies on the Mainland.

However, we do not expect this to continue in the first-half of 2020, given the uncertainty in China. Elsewhere in the region, we saw a somewhat mixed performance by market. Solid performance by our agencies in Australia, South Korea and Thailand was partially offset by reductions in Japan and Singapore.

Latin America was down 1.3% organically in the quarter. Brazil once again returned to a negative organic performance as did Chile and Colombia, offsetting some growth in Mexico in the quarter. And lastly, the Middle East and Africa, which is our smallest region, was positive for the quarter with Qatar and the UAE turning in strong performances.

Turning to Slide 11, we present our mix of revenue by our client’s industry sector. As we saw throughout the year, when comparing the full year revenue for 2019 to 2018, there was a small shift in our mix. As a result of the Sellbytel disposition, the mix of revenue from technology clients has been reduced.

Turning to our cash flow performance, on Slide 12 you can see that for the year we generated $1.73 billion of free cash flow, excluding changes in working capital. As for our primary uses of cash on Slide 13, dividends paid to our common shareholders were $564 million, up about $16 million year-over-year.

As you recall, we increased our quarterly dividend by $0.05 a share effective with April’s payment. The increase in the cash payment was partially offset by a reduction in common shares over the past 12 months.

Dividends paid to our non-controlling interest shareholders totaled $97 million, down versus the prior year, due to a combination of dispositions and the repurchase of shares from our minority shareholders.

Capital expenditures were $102 million year to date, down compared to 2018, primarily due to a reduction in leasehold improvements from our real estate activities year-over-year. Acquisitions, including earn-out payments totaled $124 million.

As we’ve mentioned previously, this is a decrease when compared to last year, when we opportunistically executed on several acquisitions. And stock repurchases, net of the proceeds received from stock issuances under our employee share plans were $604 million. All in, we generated $239 million in net free cash flow over the past year.

On Page 14, we present our capital structure as of yearend, which reflects the changes we discussed earlier, regarding the refinancing actions we took in the third quarter. Regarding our capital structure at the end of the year, our total debt was $5.14 billion.

And our net debt position as of December 31 was $835 million, down almost $400 million from this time last year.

Year-on-year the improvement in net debt is primarily due to our positive free cash flow of $239 million and changes in operating capital of $125 million, which includes the year-over-year improvement of $45 million in our working capital management. As for our debt ratios, they remain solid. Our total debt to EBITDA ratio was 2.2 times.

And our net debt to EBITDA ratio was 0.4 times. And our interest coverage is 10.4 times, which has improved over the past year due to the reduction in our interest expense.

And finally, on Slide 15, you can see we continue to manage and build the company through a combination of well-focused internal development initiatives and prudently priced acquisitions. For the last 12 months, our return on invested capital ratio was 29.5%, while our return on equity was 49.6%. And that concludes our prepared remarks.

Please note that we’ve included several other supplemental slides on the presentation materials for your review. But at this point, we’re going to ask the operator to open the call for questions. Thank you..

Thank you. [Operator Instructions] Our first question will come from the line of Alexia Quadrani from J.P. Morgan. Please go ahead..

Thank you very much. My first question is really on more of the detail on the outlook for 2020, if you could give us a sense of how we should be thinking about organic growth and then margin efficiencies that you had highlighted that benefited Q4 and actually full year 2019.

Can they continue in 2020? How should we think about profitability as well? Thank you..

I’ll start and then John can add his comments. I think for 2020 in terms of where we are in our planning cycle for the year right now, our expectations are similar to what they were at this point in 2019. So we see an organic growth range of 2% to 3% again for 2020. And with respect to margins, we’re going to continue to focus on growing EBIT dollars.

That’s been our focus all along. That’s how we approach planning and executing our business and it’s been successful. We’re always looking for opportunities for improvement and efficiencies throughout the organization. We’re particularly focused or have been in the last 3 or 4 years in the areas of real estate and back office, and IT.

We’re going to continue to do that. And at the same time, we’re going to continue to invest for growth, especially in the areas of data and analytics. Training and some other initiatives as we always strive to find the right balance between those investments and finding sustainable growth.

So for 2020 at this point in our planning cycle, we expect margins to approximate what they were in 2019, so flat for now. And we’ll see how it goes as the year evolves..

And then, John, can I ask a follow-up question, is you touched on – or maybe Phil touched on China, Asia and the region in your region in your opening remarks. I’m curious – I know it’s not a huge market for you.

But how are the multinationals sort of dealing with ad-spending in China right now? And then, just a lot of question for Phil or John, the CRM Execution business, which continues to be a tough area for you, do you see more divestitures there or opportunity to sort of – I guess, what’s the – how do we fix that business? Do we get out of some of the businesses or is it a question of sort of just cyclical and then it will come back?.

First, Alexia, we’ll first take China. We like most other people are playing day to day at this point. Our primary focus is the safety of our employees. January, which we know the results were fine. It wasn’t until after that that this became a full blown public crisis. It depends on how long it goes on. Our people have been working primarily from home.

And work goes on for most clients. Some of them are even spending more because of the products that they’re selling to the marketplace.

The one area for the quarter anyway that I think will be affected would be our Events business in China, because so any planned events has been cancelled at this point and we don’t know if they’ll be done later in the year or whatever. But as you said in your comments, China is an important, but it’s not a terribly large market for us in our numbers.

And your second question?.

The CRM Execution, just a question if you can do more divestitures there or what’s your outlook really?.

You want to do it or…?.

Sure. I think we’re going to continue to look at the entire portfolio as we through our planning process and all throughout the year. Identify businesses that strategically may make sense for disposition. We’ve been through – we believe we’ve been through the bulk of that process as far as acquisitions of size.

But we’re always open to reconsiderations and there is a lot of change that’s happened in our industry. We expect that change to continue. We don’t have any particular meaningful businesses targeted to disposition at this point.

And we think a bunch of the execution and support businesses that we have are going to get back to being positive growth, maybe not high growth businesses with good returns, with some exceptions. There are some that is still cycling through some of the issues that they faced in 2019.

But the part of the portfolio represents is a smaller part of our portfolio now than it was over the last few years. And some of those businesses are really good businesses and have always been. They’ve overshadowed by some of the underperformers within that group or grouping.

So I think you can expect we’re going to continue to work with the management teams to look for opportunities for growth and improvement and to the extent that we feel strategically we’re not going to continue to invest in them and they’re not – and they are opportunities for good returns for disposition we may continue to consider going down that route too..

Okay, thank you very much..

Our next question then will come from the line of Craig Huber from Huber Research Partners. Please go ahead..

Good morning. Thank you. I’ve got a few questions. Can you just size for us, if you would the China revenues for last year? What percent of revenues that was and what was the organic revenue there? We get that question a lot..

The size of China or us is – it’s probably a little bit less than 1.5% of our revenues. And I think given that size, we typically don’t disclose every country-by-country organic revenue growth percentage, but if you give me a minutes, I’ll just double check it.

So for the year, the year China – China’s organic growth was negative, so I think in the mid single digits in 2019..

Thank you for that..

Sure..

My next question, John, I guess, you’ve – various conversations you’ve had with your larger customers particularly here in the U.S. Just curious, how are the tone of businesses with them? And as you sort of think about the U.S.

economy what’s your sort of sense of that? Is it holding you back? Is it helping you? And the same question is for Continental Europe as well? What’s your sense of the economy in both places, please?.

Sure. Most of the conversations we’ve had, lot of that was clients in the U.S. U.S. economy continues to be strong and clients are trying to take advantage of the growth that they see in the marketplace. Obviously, with the election coming up, there is some cautiousness that goes along with that.

But for the most part, I’d have to say it’s a net positive. Once again into Europe, the markets – it changes market by market. The real behind-the-scene conversations about Brexit are – is uncertainty, not so much for 2020, but post-2020, as businesses decide where they have to be positioned and what needs to get done. France is – the market’s okay.

We’ve suffered an individual loss in some of our execution businesses, which affect our numbers, but the market’s okay. In Germany, Germany is a question market at this point. Not a negative, but a question mark, especially since, I think, it was last night, the expected success that Angela Merkel decided she would not be running to that position.

So we don’t have any better information at the moment. Russia continues to be a strong performing market for us. I don’t know if that covers most of the things, you want me to cover..

No, I appreciate that. Every year in the fourth quarter, you tend to have some variability around your project related work, obviously, here in the fourth quarter.

Can you maybe size that for us? How did – in terms of dollars, maybe how you want to do it the fourth quarter of this year versus last year, please?.

I think, we typically see as we head into the fourth quarter, there’s somewhere around $200 million to $250 million of project work that is typically available for our agencies to achieve. And our agencies do typically achieve something in that range. Some years, it’s a little bit lower. Some years, they actually do a little bit better.

And there is a whole variety of factors, and it’s not just when we speak about that in the fourth quarter, it’s not just our project based businesses alone that are actively pursuing year-end project opportunities with their clients.

So I think, this year was probably similar to maybe a little bit better than last year’s fourth quarter, and I think, if you go back to 2018, it probably wasn’t as good a performance where there wasn’t as much of it that we were able to convert in that fourth quarter.

But that’s a typical range that we see, it’s hard to actually put your finger on every dollar, and whether where – what exactly the client situation was that led to us being able to capture those dollars. So that’s traditionally what we found, and it’s been pretty consistent over the years..

Got you. Thank you very much..

Sure..

Our next question then will come from the line of Dan Salmon from BMO Capital Markets. Please go ahead..

Thanks for taking the questions, and good morning, everyone. John, I was hoping you could comment on the recent news about Accenture reportedly closing their media auditing division. You commented, I think, on that specific issue on prior calls, and I’d love to hear an update on that specifically.

But really, more importantly, I’d love to hear just your broader thoughts, particularly as you enter 2020, about the competitive environment and particularly with that group. And then just you mentioned all the sort of success of the Healthcare division, and the numbers are clearly robust there.

I hate to ask about one of the markets that are seeing challenges, but I’d just love to hear an update on the PR division. In particular, just we know that that’s a business where it might have lagged in adopting technology within marketing traditionally, but where it does appear to be really picking up.

And I’m wondering how you see the role of technology in helping bring that division back to growth going forward this year. Thanks..

Well, first, on Accenture, I did comment, I forget when it was back a while ago that some of their ambitions and the fact they’re still in the media auditing business was inconsistent. And I’m just happy to see that they got out of the business.

And we’ll continue to compete with them where we see them, although we haven’t run into them very often on major pitches.

Your second question was about Healthcare, and could you just reframe it for me for a second?.

Rather you emphasized the strength in Healthcare. What I was hoping to just hear a little bit more about was the PR division and how you aim to get it back to growth.

And in particular, the role of technology and whether you’re seeing that become more significant within those businesses?.

Sure. Well, I think the utilization of Omni and especially Q, which I mentioned in my remarks, will benefit PR business in some of their assignments.

The other activity that’s going on – now let me frame it, even though, we’ve had some difficulty with a couple of percentage points loss here and there, the profitability of the PR division has been and remains very strong. So the opportunity is a marketplace opportunity, it’s not anything structurally to do with the business at this point.

And we’re continuing to go through and evaluate. Recently, John Doolittle took over for Karen van Bergen as the head of that practice area. And we’re sitting down and taking into the hard look at where we get our revenue, what we can expect in the future and what changes we want to make to the business.

So it’s an opportunity from my perspective, it’s not really a problem. It’s just constantly running 1% or 2% below the prior year. And technology will help that as well. Q especially, which has just been – it’s been in development for over 5 years, but it’s just been added to the Omni offering.

I believe will particularly help the PR business in some of the things that they’re doing..

Great. Thank you..

Sure..

Our next question then will come from the line of Julien Roch from Barclays. Please go ahead..

Yes. Hi, there. Thank you very much for taking the questions. Coming back on China quickly. You said it was less than 1.5% of revenue and that so far the only impacts were you events business, because no event was taking place in China. How much is events either out of the Chinese revenue or out of the 1.5%? That’s my first question.

The second one is could you give us some color on the organic growth of your media practice in full year 2019? You said it was solid. It’s one of your largest practice, and it’s been the growth engine of agency in the last few years.

So organic would be great, and if you don’t want to give a precise number, maybe a range, I don’t know, 2.5% to 5% or 5% to 7.5%? And then last question is on the number of shares. It was flat in Q4. Well, it usually goes down by about 1-plus million a quarter. So what happened in terms of number of shares in Q4? Thank you..

I’ll let Phil answer some of these. Are you applying for a job? Because some of the detailed questions are probably questions a few employees that actually look at it. We are not in the business of segregating our businesses in a particular market.

We haven’t done in the past, but our events business – our main business is Media, Advertising and Public Relations in that market. Events add something to it, but I’m not going to get into the dissection of that for disclosure. So I apologize for that. But what was the second? The – go ahead..

And then – no, I mean, if you knew that, I just wanted to have an idea of the growth of media in 2019..

I think overall, it wasn’t disproportionately higher or lower than our overall growth rate. I think, if you go through the numbers we’ve been through on the call.

You can see Media, Advertising and Healthcare grew better than the overall portfolio, and some of the overall portfolio, namely PR, CRM Execution & Support, in particular, either didn’t grow.

So by that, you can include the 3 that did grow or the primary drivers of our growth grew at a little bit higher rate than our overall average rate for the quarter and the year. And I think, each of those businesses had a good year and did well and drove our growth overall.

But as far as the specific percentages, I think, we provide quite a bit of information to give you a good sense of that. But I don’t think there’re any dramatic – anything dramatically different about that part of our portfolio.

And some of our Media business is actually in like markets such as Brazil and some others are integrated into the advertizing businesses. They aren’t standalone media businesses, so it’s hard to pull out exactly how much of the growth in those markets came from standalone media versus advertizing, because they are integrated.

And as far as shares go, in the fourth quarter, I’m not quite sure I follow in detail your observation. But we can go through that after the call. I think certainly we bought back through share repurchases as little bit more in the fourth quarter this year than we did in the prior year.

And maybe what you’re seeing has something to do with just the way the year-end averages get complied. And we haven’t seen the effects just yet..

Oh, is that just the timing, because 219.3 diluted number of shares in Q4 and you had 219.4 in Q4? So it’s just the timing of the average then?.

Yes, yeah, you kind of – you will see I think more of that or an acceleration of that effect when you get into 2021as the averages start over..

Okay, very clear. Thank you very much..

Sure. I think given when the markets open, we probably have time for one more call – one more question..

Thank you. Our final question then will come from Adrien de Saint Hilaire from BoA. Please go ahead. One moment, please go ahead..

I’ll try to be quick. I’ll try and be quick. Thank you very much. So first of all on the Chinese points, you said it was down mid-single-digits. I’m just curious if you have any explanation why it is indeed down mid-single-digits in an economy which is still growing 5% to 6%.

Second question is on your expectations around the phasing out of cookies at Google.

Do you think that’s bad news in the short-term, good news in the long-run, or maybe the other way around or is that good news in all cases? And then, lastly, about your performance in the Middle East, should we expect some carry over into the first half of 2020 as well? Thank you very much..

I’ll take the China question. I think – our growth this year in China was largely due to some performance challenges. I think we lost a couple of clients. And frankly, as a portfolio, our agencies, with some exceptions, but our agencies didn’t perform as well as they did the year before frankly.

I think the current situation presents a very different set of challenges. So until we get some more clarity and so the situation resolves itself, I think our expectations are similar to everybody else is there is just little bit too much uncertainty to have a clear picture as to how it’s going to roll out in China.

And in the Middle East, I think we’ve got some good businesses that we expect to continue to grow. But as an overall percentage of Omnicom’s portfolio and Omnicom’s growth, we don’t expect that to be significant or meaningful.

But it’s been a nice part of our portfolio and we’ve got some nice businesses over there that have been doing well and we certainly expect them to continue to do well..

With respect to your first question regarding cookies, honestly, we’ve been expecting this for some time now. It’s not new news to us. It will make targeting a little bit more challenging than it was in the past. Then it certainly will make Google stronger.

But in anticipation of it, that’s why we work so diligently on the creation of Omni and the enhancements that we made to it. In the future, it’s not just going to be the data, it also has a lot to do with the execution, which you actually do with that data and how you process it.

Clients, other people have other sources, which we can get access to from first-party data, which can be used to accomplish many of the objectives that were made a little bit easier with cookies..

So you don’t expect any impact on your media activities, just to be clear from that news?.

Very minor. But I expect, because we’ve been adjusting and we’ve been anticipating this for some period of time. There will be changes to everything. What happens today will be different to what happens tomorrow. But we’re not threatened by it. And it makes us more valuable..

Yeah, the more complexity there is in the marketplace, the more clients need our expertise and need us to help them solve some of the challenges that this creates for them, not just for us..

Many thanks..

Good..

Okay. Thank you everybody for taking the call and for joining us. And have a good rest of the day..

Thank you..

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, for using AT&T Executive Teleconference. You may now disconnect..