Interpublic results 'unacceptable' as revenues fall
NEW YORK - Interpublic, the world's second-largest advertising group, has described its third-quarter results as 'unacceptable' after reporting that revenues had fallen by 7.4% to $1.5bn (£950m), with net income of just $7.5m.
The Interpublic Group of Companies had already confirmed last week that its earnings per share were way below analyst estimates at two cents per share.
The company said that it does not expect to meet its earlier guidance on full-year earnings. It has previously said it expected earnings per share of between 85 cents and 90 cents.
In a statement, Sean Orr, chief financial officer of Interpublic, said: "Results for the third quarter are unacceptable. We are keenly focused on aligning our cost structure with the current and prospective revenue environment."
Interpublic blamed the low operating margin on costs at McCann-Erickson and Octagon Motor Sports, which runs the Brands Hatch race track. McCann-Erickson has uncovered $181.3m in charges, leading to an SEC investigation and the restating of the past five year's figures, while Octagon moved from profitability in 2001 to posting a pre-tax loss of $37.4m for the third quarter of this year.
Advertising and media services, which include agencies Lowe & Partners Worldwide and Initiative Media, saw revenue down by 5.3% to $869.9m. Public relations was the hardest hit sector, with revenue down 18% for the quarter. Interpublic owns Weber Shandwick Worldwide, the world's largest PR network.
In line with other advertising groups, market research was the one bright spot, with revenue climbing by 10.5%
Over the past quarter, Interpublic has added $730.2m in new business, with major accounts picked up including Burger King and the United States Postal Service.
John Dooner, chairman and chief executive of Interpublic, said: "As you would expect, with the restatement behind us, we can now focus all of our energy where it belongs, on our clients and our people, as well as financial imperatives such as margin improvement and strengthening our balance sheet.
"We are especially encouraged by the improvement in organic revenue in the third quarter, which we believe is a reflection of our strong new business performance since the beginning of the year."
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