Aegis Group profits slump 86%

LONDON - Aegis Group, the multinational marketing and research group, has posted an 86% slump in pre-tax profit for the first half of the year and has admitted the overall market decline has been "greater than expected".

John Napier, chairman and interim chief executive, Aegis Group
John Napier, chairman and interim chief executive, Aegis Group

The parent group behind Aegis Media's Carat and Vizeum, and the research division Synovate, reported pre -tax profit of £6.6m for the first half of 2009, down from £47.4m in the same period last year.

Group revenue was down 9.2% before the impact of currency fluctuations, to £4.78bn, while underlying operating profit was down 28.9% to £51.1m.

The losses come despite record net new business wins for Aegis Media equating to $1.85bn and a positive currency impact of 15.4% on all reported revenue.

Almost every market of its Aegis Media's business in Europe, Middle East and Africa experienced falling revenue, led by the particular tough advertising markets of Spain, Portugal and Italy.

In comparison, Aegis Media's UK operation performed strongly, propelled by large new business wins for Carat at the end of last year and beginning of 2009, including Kelloggs, Santander and Vodafone.

Synovate, meanwhile, was said to have suffered from "severe market conditions and the complexity of its business", resulting in falls in revenue and less advanced cost reduction measures.

Aegis claims it remains "comfortably within its covenants", but admits market conditions are expected to remain difficult in the second half, although both Aegis Media and Synovate will face easier comparatives.

John Napier, chairman and interim chief executive, pointed to group strategy that had introduced cost reductions, increased the flexibility of variable costs and safeguarded service standards, while having the management capability to react to market opportunities, as having helped make the group "perform resiliently in a downturn".

He remained optimistic for the full year, adding: "The rate of delivery of savings is increasing, and with strong new business wins in Aegis Media and an improved Synovate secured net revenue position, we expect to deliver a full-year profit outcome in line with the current market consensus."

The results follow rival marketing behemoth WPP posting pre-tax profits drop of 47% earlier this week to £252.2m for the first six months of 2009.

In July, French rival Publicis Groupe's net profits for the first six months fell 13% year on year to €167m.

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