Aegis chief urges caution despite 15% rise in half-year profits

by Kunal Dutta, Media Week 28-Aug-08, 10:55

LONDON - Aegis has announced that its underlying pre-tax profit rose by 15.4% to £56.2m in the first half of 2008, and it expects to meet full-year expectations, despite a slowdown in the advertising market.

The media buying group which owns Carat, digital network Isobar and research firm Synovate, posted organic revenue growth of 8.2% in the six months to June 30.

Group revenues rose 21.8% to £607.6m, helped by the strong euro and by 14 acquisitions in the period. This comfortably exceeded analysts' forecasts, which had estimated revenues around the £580m mark.

Underlying operating profit rose 16.7% year on year, on a constant currency basis, to £65m, while the group's year-on-year profit margin rose from 9.7% to 10.7%. Operating cash flow more than doubled to £93.3m during the period.

Aegis generated around 29% of total revenues from digital, up from 26% in 2007.

However, Robert Lerwill, chief executive officer of Aegis, urged caution, describing the trading environment as "tougher" and citing Spain, the US and the UK as markets "with signs of slowing demand".

He said: "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 for the year at the upper end of market expectations."