IPG losses reach $71m despite revenue rise in Q1

Interpublic Group's (IPG) pre-tax losses for the first quarter of 2013 were $71m (£46.6m), up 8.7% year on year from the $65.3m (£43m) it posted in the same period of 2012.

Michael Roth: chairman and chief executive of IPG
Michael Roth: chairman and chief executive of IPG

First quarter revenue for 2013, however, was up 2.4% year on year to $1.54bn (£1.01bn), at IPG. Revenues in the US rose only slightly, from $879.7m (£577.6m) to £894.4m (£587.2m), while international income increased from $627.1m (£411.8m) to $648.6m (£425.9m).

On an organic basis revenue increased by 2.3% compared to the prior-year period, led by an organic revenue increase of 4.9% in IPG’s international business, which includes the UK. Organic revenue growth in the US was 0.5%.

Net losses at IPG, which owns McCann Erickson and DrafFCB, were $59.2m (£38.8m) resulting in a $0.14 loss per share for investors.

The overall loss came down partly to increases in the group’s operating costs.

In the first three months of 2013, salaries and related expenses were up 2.5% year on year to $1.13bn (£742m), although this increase falls to 2.2% when adjusted for exchange rates and the impact of net acquisitions.

Overall, staff costs accounted for 73.4% of IPG’s revenue in the first quarter of 2013. Office and general expenses also rose 2.7% year on year to $453.3m (£2977m).

In March, IPG’s board agreed to increase its share repurchase programme from $300m (£197m) to $500m (£328m).

Michael Roth, the chairman and chief executive of IPG, said: "We started the year well and are pleased with solid performance in the quarter. The combination of the results we are sharing today, significant assignments coming on stream in the coming months and our proven ability to closely manage costs positions us to achieve our financial targets for 2013."

IPG has posted first-quarter losses for at least the past 10 years. The first quarter is usually the weakest for the group – the strongest quarter is normally the fourth – because trading is slow while costs remain the same.