Revenue improves, but problems persist for troubled network

The troubled Interpublic Group has moved to allay concerns in the marketplace over its failure to post its 2004 financial figures by releasing some unaudited results

The global advertising and media network, the parent company for Universal McCann and Initiative, delayed its results in March due to an accounting probe and the figures released last week may change if there is a restatement of accounts.

In the UK, Initiative – whose clients include General Motors and Tesco – is the sixth largest agency in terms of billings, according to Nielsen Media Research. Universal McCann, the UK's number-eight agency, holds the Coca-Cola and Mastercard accounts.

The preliminary results pointed to continuing problems for the beleaguered business. Revenue grew 7.5% internationally and 4.4% in the US, but the company said it had seen a decrease in organic revenue and organic growth, mainly because of Lowe Worldwide, the struggling creative network which is in the midst of a reorganisation.

Michael Roth, Interpublic chairman and chief executive, said in a conference call with financial analysts that the network had a "stable of great brands".

Roth said he was confident that Interpublic, which has been struggling to get back on track since a 2002 accounting scandal and a downturn in advertising, would continue to make progress on its turnaround objectives by mid-2006.

He insisted that the problems with the holding company were not indicative of problems across its constituent brands.

However, Roth was unable to state a time when the company would be able to release official results for 2004.

"We are working as diligently as possible to become current with our filings as quickly as possible," Roth said.

"It's important to mention that the filing issues we are facing are not impeding the quality and competitiveness of our professional product – the tone of our businesses is solid."

Interpublic revealed in March that it may have to restate past results because of possible accounting errors. This would be the second accounting scandal in two years for IPG, which was forced to restate $180m (£95.3m) of earnings in 2002.

Most of the errors concerned acquisitions made from 1996 through 2001, which added up to about $145m (£76.8m) in revenue that may have been improperly recognised.

The network has encountered a series of reversals – among them the loss of the £555m European Unilever account, the £105m global branding account for electronics manufacturer Samsung and Universal McCann's loss of its roster position on the £894m global Nestlé business.

The network has also seen a series of top-level personnel changes, including the former chairman and chief executive, David Bell, becoming co-chairman at the group in January when Roth – who was already chairman – took his place as CEO.

Interpublic has also replaced Robin Kent, worldwide chief executive of Universal McCann, with chief operating officer Murray Dudgeon on an interim basis.

In Europe, Interpublic removed Marie José Forissier from her role as chairman of the Initiative network. Chief executive Alec Gerster took on her responsibilities.

The network was also hit by the news that its largest client, General Motors, was reviewing its $3.5m (£1.9m) US car dealership media business as well as the £1bn global L'Oréal account.

Nevertheless, there has been good news for Interpublic on the media front in recent months as it retained the £400m General Motors media account in Europe and won Intel's global brief, worth £155m.

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