CORDIANT REPORTS REVENUES DOWN FOR 2001

Company Predicts Flat Revenue for 2002

By Published on .

LONDON (AdAgeGlobal.com) -- After weeks of delay Cordiant Communications Group announced its 2001 preliminary results today, reporting pretax profits down 55% to $37.2 million from $83.3 million in 2000.

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.

Cordiant's specialist

Related Stories:
HYUNDAI COLLATERAL WORK LEAVES BATES WEST
Agency Still in Hunt to Retain $160 Million Creative Account
BATES USA WEST CUTS 10% OF STAFF
Layoffs Blamed on Hyundai Media Account Loss
CORDIANT CUTS MORE JOBS, ADJUSTS BALANCE SHEET
But CFO Says 'We Are Not Expecting to Run Out of Money'
communications operations (which include health care marketing, business communications, branding and design and interactive operations) saw revenues increase by 119.7% to $226 million, but decrease by 10.2% on an underlying basis.

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."

In this article:
Most Popular