Aegis Reports Double-Digit Increases in Revenue, Profit

Group Predicts Global Ad Spending to Rise 6% This Year, But Lowers U.S. Forecast

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Aegis Media announced revenue growth of 20% in 2011, ending the year with $1.49 billion. The holding company, comprised of Carat , Posterscope, Vizeum, Isobar and iProspect, reported $211.2 million in pre-tax profit, a 32% increase over 2010.

The group saw organic revenue growth of 9.9% -- an improvement over the 5.3% in 2010 -- including 12% in the fourth quarter.

"The successful sale of Synovate represented the largest structural change in our history and gives the group increased flexibility to move ahead with our program of targeted acquisitions and investments," Aegis CEO Jerry Buhlmann said in a statement. "We completed 18 acquisitions and investments in 2011, and they have improved our core capabilities and positioning in a number of key geographies."

In November, Ad Age reported that the group had spent around $110 million on acquisitions, and Nomura estimated that Aegis had another $350 million to $500 million to spend.

The group also attributes much of its success in 2011 to net new-business wins of over $2.7 billion. Businesses in faster-growing regions, including China, Russia and Brazil, as well as North America, contributed about 50% of Aegis Media's revenue in 2011. That portion is compared to 43% in 2010.

Last month, media shop Carat won the nearly $4 billion GM account, and earlier this month it completed the acquisition of U.S. digital agency Roundarch, positioning it for a heightened focus on digital in 2012.

Referencing its recent acquisition targets, Mr. Buhlmann stated, "This is in line with our strategy to increase revenue contribution from digital, faster-growing regions and North America."

Digital capabilities at the firms contributed 35% of total revenue in 2011, an increase over the 32% in 2010. The growth is in line with what Carat forecasts for regional ad spending in the coming years. The media firm said in a statement that "digital will gain further strength in 2013, when online investment will overtake newspapers for the first time, fueled by consumer appetite for online video and social media, and the increasing penetration of mobile internet access."

In its latest forecast, released today, it also predicts that global ad spending for 2012 will be up 6%, which is consistent with its prediction last August. It cites spending surrounding the U.S. presidential elections, the Olympic Games and the UEFA European Football Championship. However, the firm is lowering its outlook for the U.S. in 2012 to 4.9% from its recent prediction of 5.4%.

The group expects the economy to recover in Western Europe, but with some hesitation. "We have an expectation that underlying operating profit will improve further in 2012, subject to a necessary qualification that if there is further unexpected economic turbulence and instability it will be more difficult."

Carat predicts 1.5% growth in ad spend in 2012 in the region, a downgrade from the 3% it had predicted in August.

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