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Profits tumble at Grey as PR and
direct marketing are hard hit

NEW YORK - Grey Global reported a 71% fall in net income down to £1.04m from £3.5m in the third quarter, as the weakened economic conditions took their toll with direct marketing and public relations particularly hard hit.

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Third-quarter billings fell 2% to £1.37bn and, for the nine months, Grey said billings were up 2% year-on-year to £4.2bn. Like others in the sector, it said its performance had been hit by events of September 11.

Grey said internet-related operations continued to perform weakly, particularly in the US where revenues were down 6% for the nine months and 11% for the quarter.

To counter the downturn, Grey announced it has continued to take steps to cut expenses and has incurred increased severance and related costs during the quarter and nine months.

While PR and direct marketing have been hard hit, its advertising and media business have performed better. Grey Worldwide this week won the Mars Bar/Milky Way account in Europe and the US. The agency has also reported recent wins, including the United States Postal Service and additional assignments from Procter & Gamble and Sara Lee.

Grey's media arm MediaCom recently won £277m in billings, bringing billings gains for the year to date to well over £690m. Some of the largest recent wins include Royal Dutch/Shell's global corporate work and GlaxoSmithKline.

Ed Meyer, Grey Global chairman and CEO, said, "The company's results were affected by weakened economic conditions impacting the marketing communications industry and exacerbated by events of September 11. Direct marketing, public relations and corporate communications, which are project-dependent businesses, were particularly affected."

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