Profitable year puts Cordiant in position for demerger talks

By JOHN TYLEE,, Friday, 21 March 1997 12:00AM

The Cordiant group is holding open the door to a possible demerger of its agency networks after bouncing back to financial health.

The Cordiant group is holding open the door to a possible demerger

of its agency networks after bouncing back to financial health.

Announcing pre-tax profits of pounds 41.8 million for 1996, Bob Seelert,

the group chief executive, said Cordiant was discussing options for

maximising shareholder value with its financial advisers. But he

stressed no decision was imminent on the future status of its Saatchi

and Saatchi and Bates Worldwide operations.

The return to profitability after a pounds 22.6 million loss in 1995 was

marked by the group’s first dividend payment to shareholders in seven


It has also enabled Cordiant to break free of its recent turbulent past

and the crisis that followed Maurice Saatchi’s ousting at the end of


Cordiant this week indicated demerger was on the agenda. ’We will keep

our options open,’ a spokesman said. ’These results set out a strategy

to drive forward each of the businesses.’

News of the group’s return to financial health won plaudits from

analysts, who are optimistic that current trading margins of 6.4 per

cent can be moved towards Cordiant’s stated goal of 10 per cent by


Panmure Gordon, the City analyst, immediately recommended Cordiant as a

stock worth buying in the light of the results and last week’s triumph

by the Saatchi network in the pitch for the Delta Air Lines account,

worth pounds 100 million.

Despite Bates’ loss of the Miller brewing business in the US, North

America emerged as Cordiant’s best-performing region with margins

increasing from 5.1 to 6.3 per cent. This offsets declines suffered in

continental Europe and Asia Pacific. In the UK, which generates 15 per

cent of the group’s business, margins remained stable at about 11 per


The group has also made progress in replacing lost revenue via

assignments from Ameritech, BMW, Campbell’s, Coca-Cola, CPC, Danone,

General Mills, Gillette, HSBC, Johnson and Johnson, Kodak, Nokia,

Reynolds Metal and Toyota.

Charlie Scott, Cordiant’s chairman, said: ’There is still much to be

done in the networks but this is a steady performance from which to


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