The continuation of ‘extremely difficult’ market conditions has caused 2002 revenues at advertising network, Cordiant Communications, to fall by 11% to £533 million. The figure was further dented by key account losses in the US, the group said in a trading update this morning.
Despite the fall in revenues, operating profits look set to meet market expectations at around £37 million. Cost savings for the year were £45 million, exceeded the previous estimate of £27 million.
Cordiant has also confirmed today that it is to begin disposing of its non-core assets in order to drive down the group’s debt, which is now in excess of £200 million. As a result, Cordiant will become focused on its core Bates Group business, which already account for 85% of group revenues.
The businesses being considered for disposal by the group are its 77% stake in German advertising group Scholz & Friends, Financial Dynamics International and a majority interest in the group’s Australian operations. Cordiant says that it has already received significant interest in all of these assets. The group also confirmed that it will consider the exercise of its option to sell its 25% stake in the Zenith Optimedia in January 2004.
The disposals will focus the Bates Group into a “single, integrated communications offering comprising Bates Advertising, marketing services network 141, branding and design group Fitch and specialist network Healthworld,” says the statement.
Commenting on the trading outlook for the year, Cordiant’s chief executive David Hearn said: “Market conditions remain depressed and we see little prospect of revenue growth this year. We’ve aggressively driven costs down by a further £45m into 2003 and are now focusing the Group on its core strengths. This will also rebuild our balance sheet.”
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