Interpublic posts $558m loss for 2004 but manages organic growth amid the drama
NEW YORK - Interpublic Group's long-awaited results have shown a loss for 2004 of $558.2m (£316.4m), as the company said that the restatement of figures for the past five years would reduce earnings by over half-a-billion dollars.
Interpublic released the figures today, after delays caused by the discovery of accounting irregularities and some cases of falsified book-keeping.
Michael Roth, CEO of Interpublic, admitted that both revenue and costs were not where they should be. He blamed problems on disparate financial systems caused by poor integration of agencies acquired in the late 1990s.
It was not all bad news. Despite the challenges of its accounting situation, Interpublic did see organic growth of 1.3% in the first half of this year, and 1.2% in 2004, and its first half-loss for 2005 of $139.4m was an improvement on the figure of $182m for the same period in 2004. For the second quarter of this year, it recorded a small net profit of $7.7m.
McCann Erickson, Draft and Deutsch all reported revenue increases during 2004, but these were offset by losses at Lowe.
Interpublic said that Lowe, which is now being run by a new management team, had shown a slight improvement in the second quarter of 2005. It said that the agency was now prepared to work with other Interpublic shops on pitches -- which it had not been in the past -- and that this had helped it win the Nokia account. Roth said he was encouraged by the agency's performance.
He also addressed the issue of client vendor credits, which have been the subject of press scrutiny. Roth said that even though the practice was legal and accepted in many markets, its decision to adopt a consistent global standard was the right one.
"I believe our clients have appreciated our forthrightness and our willingness to tackle a complex issue that they are also trying to come to terms with," he said.
As the market began to digest the complex results, Interpublic's share price rose by five cents first thing Friday morning, trading at $11.21, an increase of 0.45%.
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