Interpublic this week offered no immediate end to its problems, posting a third-quarter operating loss of $96.8 million.
Major client losses including General Motors and L'Oreal, worth almost $2 billion in combined billings, were blamed for its depressing performance, which saw organic revenue decline by 2.6 per cent.
With the embattled company still trying to shake off the effects of an accountancy scandal and the Securities and Exchange Commission conducting a probe into its finances, Michael Roth, the IPG chairman, held out little prospect of a rapid turnaround in fortunes. "Client losses that took place during the past 12 months will continue to affect our comparative results over the next few quarters," he said.
Although IPG managed to narrow its losses, analysts said the latest deficit was larger than expected. Shares in the group traded down as much as 4 per cent in early dealings.
The world's third-largest communications group, whose networks include Lowe, FCB, Initiative and McCann Erickson, said the latest figures reflected the amount of extra cash IPG had shelled out in professional fees needed to set up new financial controls.
Roth said these commitments would slow down in the next two years and predicted a "modest" decline in organic revenue for the whole of 2005 as a result of client losses.
IPG insisted its priority now would be to strengthen collaboration between its agencies and increase the number of marketing services used by each client.
HARD GOING FOR IPG ...
- Third-quarter operating loss of $96.8 million
- Net loss of $101.5 million
- Operating loss of $136.4 million (year to date)
- Total debt $2.3 billion
- 6.7 per cent increase in salary and related expenses to $2.89
... AS RIVALS PULL AWAY