Interpublic Group third-quarter loss trebles to $327.1m

LONDON - Interpublic Group has reported a third-quarter net loss of $327.1m, more than three times the $89.6m deficit it posted for the same period last year.

The dramatic losses were largely attributed to legal costs from the accounting irregularities that took place between 1997 and 2001, and came despite the sale of its NFO World division to Taylor Nelson Sofres for $89.1m (£53.3m).

Interpublic, which owns the McCann-Erickson, Foote Cone & Belding and Lowe advertising agencies as well as Initiative Media, was hit by costs of $127.6m -- the estimated value of pending legal action relating to the accounting scandals.

Restructuring charges for the three months to September 30 were $57.1m.

The overhaul of the group, which has resulted in the loss of 4,000 jobs, is expected to be completed in the first half of 2004 and is forecast to cost the company $250m. However, salary and related expenses were down 1% to $810.9m.

Third-quarter revenues rose 2.3% to $1.4bn, as a result of improving market conditions and favourable exchange rates. The group's operating loss widened to $171.1m, from $78.3m.

Revenue from its advertising and media agencies, which accounts for over two thirds of total revenues, rose 4.1% to $904.9m, boosted by several new-business wins.

During the third quarter, Foote Cone & Belding scooped the $225m US KFC account, Initiative picked up a chunk of the £200m France Telecom pan-European media account and McCann-Erickson Worldwide won the $38m Cadbury Schweppes advertising business.

At the end of the period, the company's debt had fallen to $2.5bn from $2.9bn over the year.

Group chairman and chief executive David Bell said the network was on track for its recovery programme.

"We are progressing through the first stage of our long-term turnaround plan. This consists of our ongoing restructuring programme, as well as the actions and related charges we have announced today," Bell said.

He added that the financial outlook in the industry was stabilising.

"We are also pleased to see a firming in the economy. Interpublic has obvious untapped earnings power and a range of opportunities to unlock its potential. We are aware of the challenges and, while we are making headway, there remains work to be done," he said.

The accounting irregularities scandal was followed by a series of high-level departures at Interpublic, including Ben Langdon, who was chief executive of McCann-Erickson Europe.

Interpublic chief financial officer Sean Orr also left this year, and former Interpublic CEO John Dooner was demoted to chairman and CEO of McCann-Erickson WorldGroup and replaced at the helm of Interpublic by Bell.

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