Aegis Profits Hit By Ad Slowdown, Good Performance From Carat
Global advertising and communications group, Aegis, has posted lower than expected profits in its interims results today, as the advertising recession continues to bite at media companies.
Profits were hit substantially by a £5.9 million investment in Aegis’ core businesses and a £2 million restructuring cost. The wider dotcom collapse and the economic crisis in Argentina further negatively impacted Aegis’ business.
The group’s media planning and buying agency network, Carat, performed well during the period, gaining record net new business wins totalling $1,149 million; H1 2000 new business totalled $1,031 million.
Aegis says that 2001 has been a testing time for the industry following the market slowdown that began in the US in the latter part of 2000. Dotcom fallout, reduced marketing spends, falling indices and profit pressure all conspired to shake US business confidence and, as a consequence, many of the large US multinationals began to rein back on adspend at the start of 2001, it states.
After an exceptional 11% growth in US adspend in 2000, fuelled mainly by incremental income garnered from the short-lived dotcom boom, industry watchers expected the market to settle back to a more sustainable level in 2001. In the event, advertising spending by America’s largest marketers actually fell on average by 12% in Q1 2001 and continued to decline in Q2. In Europe, the fall has been less severe but even so the rate of decline in the second quarter took the media industry by surprise, the group commented.
Carat has released its own advertising growth forecasts which paint a familiarly gloomy picture.
| Carat adspend forecasts | ||
| 2001 | 2002 | |
| North America | -2.3 | -0.2 |
| Europe | -0.4 | 2.8 |
| Asia-Pacific | 2.7 | 1.0 |
| Global | -0.6 | 0.7 |
| Source: Aegis, 12/09/01 | ||
Shares in Aegis were down 1½p at 84½p by late morning today, although trading is very light today following the devastating attack on the US yesterday.