U.S. account wins fuel Aegis growth

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LONDON--Aegis, the holding company for media buying and planning specialist Carat, reported pre-tax profits up 19% to $46.6 million on sales of $3.6 billion in the six months to June 30, compared to the same period a year ago. Aegis Chief Executive Doug Flynn, who joined thecompany earlier this month from News International, where he was chief executive, says this year's new business wins will fuel next year's profits growth.

In the first half of the year, Aegis had $806 million in net new business wins, more than half of which were generated in the U.S. from clientssuch as Pfizer, Midas, Henkel and Seagate Technologies. For the whole of 1998, Aegis had $770 million in net new business.

Carat, headquartered in Paris, entered the U.S. in November 1996, and today the U.S. media market, the world's largest, accounts for only 13% of its media business. Asked if Aegis would consider teaming up with a large U.S. media specialist, Mr. Flynn says: "We're not a huge believer in alliances." Aegis estimates it has only a 1.2% share of the U.S. media market, compared to a 12.3% share in Europe.

International accounts, involving business in three or more countries, account for approximately $250 million of the $806 million in net new wins, according to Finance Director Colin Day.

France is the company's largest market for media business, at 26%, followed by Germany (18%), U.K. (16%), Spain (8%), Scandinavia (7%), Italy (3%), Asia/Latin America (3%) and Belgium (2%).

Some of the business Aegis is picking up in North America is coming from clients it already has in Europe, such as Henkel, Adidas and Alberto-Culver.

The group is not planning any major acquisitions, preferring to focus on building the Carat network in Latin America and China, Mr. Flynn says. Aegis is in advanced talks with an unnamed media specialist in Mexico.

The group is also looking for more acquisitions of customized market research companies, such as U.S.-based Marketing Facts, which it bought in June for $297 million. Aegis chose market research as a second business to add to media buying and planning because it's large, fast growing and related to Aegis' core business. The company estimates that customized market research accounts for $5 billion of the $13 billion global market research industry.

Copyright September 1999, Crain Communications Inc.

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