Profits at Interpublic fell by almost 80% during 2002 as market conditions took their toll at the world’s second largest advertising group.
Earnings were down to $20.3 million from $96.4 million in 2001 largely as a result of weakness at McCann-Erickson WorldGroup where $1.26 billion worth of business was lost last year.
Interpublic now faces $136 million in charges related to losses at Octagan Motor Sports which it is looking to sell along with the NFO World Group market research business. Mounting debts led to the group’s credit rating being reduced to one level above junk status in January (see Interpublic On The Brink Of Junk Status) and there are few signs of an improvement in fortunes.
Fourth quarter revenues fell by 3.8% to $1.67 billion and Interpublic is predicting that profits will be down by between 1% and 4% in 2003. With shares at their lowest value since 1993, the company hopes that a management reshuffle will help to assuage investors.
John Dooner, chairman and CEO of Interpublic, has moved into the hotseat at McCann-Erickson and been replaced by David Bell who said in a statement: “We have major work ahead of us. The company has made strides in improving its balance sheet and liquidity. These will remain significant priorities for me, as will a commitment to achieving financial reliability and accountability, both at the holding company and within our operating units.
