Group revenues increased by 17.9% to $871 million as a result of acquisitions, although on an underlying basis revenues decreased 8%. Cordiant's operating margin halved to 6% from 12% the year before.
Revenues from Cordiant's advertising and integrated marketing operations, which includes ad agency Bates Worldwide and global marketing services network 141, increased by 1.5% to $645 million, but declined by 7.3% on an underlying basis. Operating profits totaled $30.7 million with operating margins declining to 4.8% from 10.3% in 2000, as significant revenue reductions in the second half impacted profitability.
No payments to shareholders
The company also reported a goodwill write-off of $325 million and news that there would be no dividend payment to long-suffering shareholders.
While Cordiant's revenues are predicted to be flat in 2002, it will have higher costs in the form of debt repayments. As of Dec. 31, 2001, the group had a net debt balance of $208.8 million. Last year it increased its borrowings to fund its acquisition of Lighthouse, a marketing services agency, and to make deferred payments to South Korean ad agency Diamond Ad.
The company also disclosed today that it's expected to pay around $8 million a year in higher borrowing costs as a result of renegotiating the terms of its loans.
CEO Michael Bungey warned there would be no return to revenue growth this year: "While previous rates of revenue decline have abated, and we are seeing early signs of business activity emerge, we forecast no revenue growth this year."