Interpublic reveals 4.8% drop in second quarter revenues
LONDON - Interpublic has reported a drop in second quarter revenues of 4.8% to $1.53bn from $1.61bn a year ago.
The network, which operates advertising agencies Lowe Worldwide, Draft FCB and McCann Erickson and media shops Initiative and Universal McCann, also reported a fall in revenue of 2.7% during the first six months of the year to $2.86 billion.
There was some better news as quarterly profits rose to $46.9m compared to $3.5m during the same period last year.
Organic revenue, or increased spend from existing clients, fell 3.1% compared to the second quarter of 2005.
For both the second quarter and first half of 2006 the group said that organic revenue was solid in the Asia Pacific and Latin American regions, but had dropped in continental Europe, the UK and the US.
Michael Roth, Interpublic Group chief executive, said: "We've been clear that the bar on organic revenue would be high due to last year's client losses. Organic performance for the first half demonstrates that we've been successful in replacing these lost revenues through six months, which is a significant accomplishment that positions us well going forward."
However, Interpublic also stated that during the second quarter operating expenses decreased to $1.46 billion from $1.50 billion last year as part of Roth's cost saving measures, which are designed to turn the group around by 2008.
The network also stated that the amount clients are willing to pay for the company's marketing services had taken a downturn, and that had started to bite during the second quarter of this year.
Roth added: "During the second quarter, we also saw the first indications of stepped-down professional fees, in line with our previous disclosure. A major focus for the balance of this year will be on managing costs and delivering margin improvement.
"Our CMG and McCann units are performing well and we are confident that the new directions we are taking with Draft FCB Group and Lowe will yield positive results. We believe that we remain on track to meet the 2008 turnaround goals outlined at Investor Day."
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