Aegis sees momentum slowing after profits climb 18.5%

by Daniel Farey-Jones, Brand Republic 28-Aug-08, 09:00

LONDON - Media buying and market research group Aegis has recorded an 18.5% rise in first half pre-tax profits to £47.4m, but sees the outlook deteriorating as demand slows in the US and the UK.

The profits increase was driven by a 21.8% rise in revenues to £607.6m for the six months to June 30.

Aegis was upbeat about its performance relative to the rest of the industry; it highlighted its "best in class" organic revenue growth of 8.2% and expects to continue in this mould.

However, chief executive Robert Lerwill warned of signs that the rest of the year would be more challenging, as a result of slowing demand in Spain, the US and the UK.

Yesterday, Aegis media agency Carat revised down its global adspend growth forecast for 2008 from 6% to 4.9%.

Lerwill said: "Consequently our revenue outlook for the second half of 2008 is less certain. We anticipate a lower rate of market growth than in the first half and are therefore taking some early steps to tighten our cost base in a number of markets.

"Nonetheless we remain confident of delivering a result at the upper end of market expectations."

Asked to expand on the costs issue, a spokeswoman said the company was focusing on cost control rather than cost cutting. It was still hiring but more so in emerging markets than in established markets, where it was ensuring it had revenue coming in before committing costs to it.

There is no change to the company's busy acquisitions programme, which included 14 acquisitions during the first half.

The larger Aegis Media business grew revenues 26% to £385.9m while market research division Synovate grew 15% to £221.7m