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